JANUARY 3 2017

Welcome to Exchange Invest, the unique market structure daily, where it’s Issue 925 – or in Porsche terms, a multiplicity of four speed sportomatic gearbox designs…

In Today’s Exchange Invest

The air of sleaze around DB1 is exacerbated by the FT and in fact pretty much the whole world’s legacy media. LME looks to have been materially incompetent in market surveillance (beside their cash surveillance issues now sub judice). BSE IPO a stonking success – to the point of being clearly mispriced by the issuers which spells irritating news for those who sold out such as SGX. Oh and that all almost squeezes out good results from CME too.

And there’s more, much more, happy scrolling:

In BigWorld

City AM trumpets the news that “Deutsche Bank’s management board has promised it won’t be the first to leave London after Brexit.” As usual the media seems to have missed two glaring possilities – aka that London is not being given a vote of confidence by the ailing Deutsche Bank but rather this is just, well, realpolitik to use a fine English word. One might argue that Deutsche Bank is actually unable to plan even 2 years ahead because it is unlikely to survive the period before Brexit due to either:

Going bust through conventional means
Being closed down due to regulatory pressure or indeed just bankrupted through weight of fines…

Chief executive John Cryan has also stated: “I’m sure London will fight back and remain an important financial capital.” Yes, indeed but will Deutsche Bank be able to escape the weight of its litigation woes and debt burden to remain an important financial intermediary?

Public Markets

CME Group Inc. Reports Strong Q4 & Full-Year 2016 Financial Results
PR Newswire (press release)
CME Group Results Helped By Political Change And Trump
Financial Times

PLY: Good numbers.

CME Group CEO Terry Duffy: We Have A Moral Responsibility To Help Chicago And Other Struggling Cities
Fox Business

PLY: In my childhood when a fraction of the number of people per head of population were being killed in Northern Ireland, lots of US politicians wanted the UN on the streets of Belfast – maybe we should suggest that to Mayor Emanuel and President Trump?

Terry Duffy is quite right to speak up about the problem and offer help to keep the dream alive in the north and south side of Chicago.

German Probe of DB1 Chief Focuses on LSE Merger Talks
London Stock Exchange Merger With German Rival In Jeopardy After ‘Insider Trading’ Probe Raids …
This is Money

The London Stock Exchange’s merger with its German rival has been dealt a hammer blow.

PLY: And so we have a twisting noose in all ends of the media accompanied by a festering odour of unseemly actions all at the same time as the FSB (chaired by the Bank of England Governor) makes noises about Living Wills and Too Big To Fail CCP. Does the latter concern overlap with the most egregious monopoly creation in the history of clearing houses?

Meanwhile, over in Nigeria too there is a bit of a kerfuffle about public trust in the exchange with allegations of money going missing from a now suspended brokerage (see also below).

Hmmm, just think of that, I can link the nation perhaps most known for dodgy digital fraud and the Deutsche Boerse in one effortless line. That is not a good look for the exchange turning into an investment banker haven of fast deals and dubious dealing.

Incidentally, as per my Premium post yesterday the crucial countback doesn’t look good on any set of fingers and thumbs I have been able to deploy – moreover the legacy media has yet to add the vital point…it’s not just the “talks” per se. However it’s good to see the FT applying pressure to what looks like the sort of deal which riles youngsters who see a rigged banking system.

BSE Lists On NSE, Shares Trade 34% Higher Than Issue Price

PLY: Excellent start for BSE which was expected to show a 15-25% premium (BSE Likely To Debut At 5-15% Premium Over Issue Price) according to the Economic Times. The Issue price valued at circa $650 million – albeit whoever priced the IPO looks to have been materially incompetent given the issue was something like 50 times oversubscribed… SGX shareholders will be amongst those doubtless disappointed to see their stake sold at a cheap price.

London Metal Exchange Warned By FCA Over Systems
Financial Times

PLY: Emerging as the reason behind the ousting of both Garry Jones and Stuart Sloan. While this is a remarkable oversight (putting it very mildly) – surely the management shakeup at LME was driven by the macro too? AKA LME was bought at a hefty premium at the top of the market and HKEx is failing to extract value while it has had various warehouse issues, there are pricing arguments, competitive threats which seem to be gaining traction and of course a bit of a debacle in moving offices (albeit the surveyors must take the blame for failing on floor loading factors).

However, let’s just remember the elephant in the room here which is too quickly forgotten and now becomes even more vital given the longstanding silence of LME on the topic and this latest story emerging to the effect of LME not being coherent in its management of surveillance: a former staff member within the accounting department has been accused of stealing a million Pounds from the company. Now we hear their surveillance was clearly lacking according to the FCA…

LME looks to be in chaos with this latest set of revelations via the FT and the culture of silence and opacity may be a carry over from the old style dealing of the floor but it needs to end. Who better then than the acting CEO Matt Chamberlain to break with tradition? Given that he was employed from the UBS deal team as he had the concept for the new LME strategy all along… it would become him to demonstrate a whole new approach in keeping with his masterplan which so encouraged Charles Li to hire him.

Capital Market Of Romania – Next Capital Development
Bucharest Stock Exchange

A conference is being organized by Bucharest Stock Exchange : ‘Capital Market of Romania – Next Capital Developments’ on February 2nd.

PLY: In other news, there have been 250,000 Romanians on the streets with genuine grievances as the Romanian government moves to wipe out corruption convictions against predominantly political troughers. With a 100 million investment mandate already publicly evaporating and the end of QE, expect a more agrarian turn in Eastern Europe soon with Romania the biggest EU loser. Against that background, I do wish BvB a successful conference but string pushing might be more long term productive as string pulling threatens to tear the fabric of this corrupt, feudal nation apart.

SGX Partners NUS In Stock Pitch Competition For Students To Showcase Equity Research Skills

CME Group Competition Brings Trading To The Classroom
Tri County Sentry

Stock Exchange Boss Investigated For Alleged Insider Trading
KITV Honolulu

Prosecutors in Germany are investigating share purchases made by Deutsche Boerse CEO Carsten Kengeter just weeks before his company began …

PLY: Seriously, when it’s being syndicated in Honolulu, you have a major brand issue. It’s just a pity that “Carcrash” wasn’t listening when I noted he needs to defenestrate the PR/IR departments. Instead he focussed on what looks increasingly like a fateful series of talks…

…Subscribers to Exchange Invest Premium can also read: Does Insider Dealing Sink DB1-LSE?

Private Markets

Channel Islands Stock Exchange : An Unlikely Hot Topic
JD Supra (press release)

PLY: Focuses on huge EU own goal of MAR which hands offshore ex-EU markets a massive advantage (qv CISE) compared to the incumbents who have worked so hard (especially Ireland and Luxembourg) to build a coherent debt market within the EU only to be undermined by misguided EU over-regulation. Presumably London licks its lips at taking huge chunks of this market once Brexit has occurred – unless/until the EU relents of course (and preferably reduces the dumb 100K tranche rule too so we can have a proper investment market).

N10 Billion Scandal Rocks Nigeria’s Stock Market

Industry regulators are currently struggling to restore investors’ confidence in the capital market ,

Ethiopia’s State-Of-The-Art Commodity Exchange
The Economist

PLY: Founder Eleni complains of lost momentum, the economist offers a fairly damning portrayal of failure but the truth is somewhere between the two. Nevertheless the parish needs to take heed and work hard to make such markets work even better…

JSE Social Exchange Requires Consensus Definition Of Social Enterprise
Jamaica Gleaner
Venture Capital Pitch Room Winner 2017- Proudli Technologies Limited
Jamaica Stock Exchange

Renae Bruce Miller (left) of Proudli Technologies Limited is the coveted winner of the fiercely contested 2017 Venture Capital Pitch Room competition …

‘List Firms Under One District, One Factory Policy On Gse’
Peace FM Online

PLY: Creative concepts.

Edinburgh Explores Concept Of A New Social Stock Exchange For Scotland
Social Stock Exchange

PLY: Regional stock exchanges are needed in all forms. I see the Social SE’s Liverpool chapter is opening too – well done.

Econet Defies Zimbabwe Stock Exchange And Goes Ahead With Extraordinary General Meeting
The Insider

PLY: Interesting insofar as the collapse of ZImbabwe has led to an issue of a rights issue to be paid overseas which means a lot of domestic funds etc would be disenfranchised and thus insta-diluted by being forced to invest domestically.

Special Section: FTI, NSEL, India at the Crossroads

PLY: There’s another post on that Tumblr account promoting “The Target” book (What’s The NSEL Mystery?) but I am not overly enthused…


BATS Connects To Buy Side
Markets Media

Europe’s largest threat to the incumbents such as ITG and particularly Liquidnet is rolling out. LIS, powered by BIDS is working with the sell side and the buy side are due to garner direct access next month.


Eurex Tees Up OTC Forex Clearing With CLS
FX Week (subscription)

PLY: Interesting concept, devil in the details as always.

Lobbying For Change
Tri-State Livestock News

Career Paths

IDFC MD Limaye Frontrunner To Head Nse
Times of India

IDFC managing director Vikram Limaye has emerged as the frontrunner to take over as the MD at IPO-bound National Stock Exchange.

Bourses Propose Fresh Names For Independent Directors
Financial Express Bangladesh

Madhu Kannan Joins Uber As India Business Head

PLY: Another ex-NYSE Euronext staffer from the multitudes of the ancien regime…

20 Ex-Tower Traders Join Rival Vega Capital
FOW Magazine


Crunch Report | Kickstarter Acquires Huzza

Other Stories

ESMA Updates Q&A On MiFID II Implementation

Is The NYSE Bumping Up Its Listings?
Traders Magazine

HFT industry rep Bill Harts discusses NYSE, IEX et al

Auscann Joins Pot-Stock Boom On The ASX
The Australian Financial Review

PLY: That’s enough dope listing stories, here endeth that thread. ESMA Announces Details Of 2017 CCP Stress Test

African Exchanges Magazine 2016, Issue 4

UK Financial Watchdogs Shake Up Enforcement System

ESMA Updates Its EMIR Q&A
Thanks as always for reading Exchange Invest and enjoy your weekend…

Best wishes,


Patrick L Young
Executive Director DV Advisors

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