July 14 2016

elb2Frantic mid week day, a scroll is essential! There is a new UK Government and it is already fascinating even after the first batch of appointments – sending clear signals to the world and indeed the EU. Here’s an update in Premium: Brexit: UK Cabinet Update. It’s great to have heard that our Brexit Premium coverage is proving popular with the C-suite across the parish – thanks to the industry leaders praising the content.

Our DB1:LSE countdown to the likely antitrust hard stop zone hits 209 days. Things just get worse and worse as DB1 further changes its approach, adding a fortnight to their self-imposed deadline for the (lowered) 60% threshold. Given DB1 are a match umpire in this field as part of being a regulated business, it’s a bit like not understanding the infield fly rule then expecting to be viewed as a credible baseball official. The Buba have just gone protectionist on the Eurozone and Germany’s bid for LSE which ought to only increase hostility. Overnight Portugal has joined the anti merger camp.

More encouraging news as Dar Es Salaam has a corker of an opening day’s trade, doubling from IPO price while OpenDoor Trading raises $10 million on a $40 million valuation following on the CAD $7.5 million raised by recently launched OverBond in Toronto.

ICAP gives London vote of confidence, IHS Markit begins trading with catchy INFO ticker at NASDAQ, SGX cash system falls over, US awards orange jumpsuit to spoofer while Jignesh Shah is held on remand in India and there’s much much more…

Meanwhile in Bigworld it’s Bastille Day celebrating the 1789 storming of the prison following Camille Desmoulins’ epic oratory. Of course this could never happen again as nowadays the Fifth Republic has a stern socialist Francois Hollande. The old “them and us” of a privileged class is now over with Hollande living a hermit-like existence in his Presidential palace surrounded only by a mere coterie of chefs and a vast wine cellar, with barely a subsistence quantity of beautiful mistresses by French standards and oh, a barber’s bill stretching somewhere around $150,000 a year. Er, well hope ESMA and France have a nice day off anyway. Vive la Revolution!

New Premium Posts Overnight:  

Brexit Mythbusters 1: The Vote & Its Legitimacy

Miles Celic To Lead City UK

Public Markets

Recommended All-Share Merger Between LSE & DB1 – Exchange Offer Acceptance Update


PLY: Even a non-soccer fan like me knows the 1966 World Cup final involved a much disputed goal. However at no time can England be accused of moving the goalposts to win the trophy. In the case of DB1’s Merger of Equal Desperation, this is not so clearly the case. Having lowered the threshold, the date has now extended to eventually get the deal over the line. So DB1 have an insufficient 53% tendered as of the original deadline but that will eventually go right so long as they keep voting open for long enough. The fact that DB1 is fast becoming a laughing stock in the parish for their myopic incompetence seems not to have occurred to the C-suite whose imperial arrogance it seems apt to highlight on Bastille Day. What comes next for DB1, will they employ Hilary as an IT security consultant to improve their tattered reputation?

Bundesbank: Brexit Strengthens Case For LSE-DB1 Merger


SSM’s Dombret Touts Frankfurt as Candidate for Euro Clearing

Alessandro Speciale & Nicholas Comfort – Bloomberg

London must prepare to lose euro trading and clearing activities once Britain leaves the EU but the business case for merging the London and German stock exchanges has been strengthened, Bundesbank board member Andreas Dombret said on Wednesday.

PLY: Naked German protectionism ought to help convince British authorities that this is a bad deal and surely an own goal by Buba board member Andreas Dombret suggesting DB1’s takeover of LSEG (or ‘LCH’s beard’ as it’s allegedly nicknamed amongst some dealers) ‘would hand Frankfurt a trump card in the tussle for a slice of London’s banking business.’

Portugal Protests Against LSE-DB1 Merger

Andrei Khalip – Reuters

Portugal has asked Europe’s antitrust chief to take action to prevent a merged DB1 & LSE becoming so dominant that it would make access to finance more difficult.

“The merger would negatively impact the functioning of the capital market. Such a concentration of trading and trade-related services poses a clear threat to competition,” Portugal’s Finance Minister Mario Centeno wrote in a letter to Competition Commissioner Margrethe Vestager, a copy of which was seen by Reuters. “It also endangers the viability of several European stock exchanges,” it said.

PLY: First Belgium, now Portugal…and in the future, a torrent of complaint awaits the Merger of Equal Desperation.

QV Premium: DB1-LSE Merger Brief.


Theresa May Urged To block German Takeover Of LSE As One Of Her First Acts As PM

James Burton – Daily Mail

PLY: May has already argued for British champions in her brief election campaign to become leader. It is not clear this call by a series of backbench politicians will be listened to immediately but Britain needs to think of its financial centre future very clearly and the symbolism of selling LSE at this stage, particularly with the risk of the HQ leaving the UK, is not a positive sign. QV the naked protectionist rhetoric of the Buba above.


Nasdaq Welcomes IHS Markit Ltd. to The Nasdaq Stock Market


IHS Markit Ltd. (Nasdaq:INFO) commenced July 13, 2016.  This marks the successful merger of IHS (formerly NYSE:IHS) and Markit (formerly Nasdaq:MRKT) – creating a global leader in financial and corporate information.

PLY: Groovy ticker symbol, wonder why Thomson Reuters didn’t think of that? Now who wants “MRKT”?

QV Premium: Exchange Deals Brief – M&As.


Thomson Reuters & CME To Integrate Instant Messaging Networks


PLY: Intelligent deal to put together two niche networks to challenge Bloomberg and others… Of course Reuters and CME have often done deals in the past, particularly with forex platform j.v.s etc.


ICAP to Stay Put Even If Clients Leave London Post Brexit

John Detrixhe – Bloomberg

ICAP CEO Michael Spencer said Brexit won’t alter the structure of his company, although he may move some sales staff to other European cities if clients relocate their trading operations.

PLY: I cannot imagine it would be any other way. Good to see Michael Spencer giving London another vote of confidence – the wall of Brexit disinvestments is simply not happening as the armageddon thesis of the now discredited former Ministers Cameron and Osborne suggested from “Project Fear.” Hope he gets a decent gong in Cameron’s leaving honours list too btw.


LME Faces Broker Revolt Over Fee Rise (subscription)

Henry Sanderson & Neil Hume – Financial Times

Upset by an increase in fees and attempts to attract HFT a group of LME brokers have begun to look into a rival platform for metals such as aluminium and copper. Martin Abbott, the exchange’s former CEO, is heading a group that will consider how a new system would work.

PLY: Revisits the story on the Martin Abbott led upstart market possibility.


CSRC: Shanghai Bourse Makes Good Progress On Feasibility Study Of Link-Up With LSE


Fang Xinghai, Vice Chairman of China Securities Regulatory Commission (CSRC), made the remarks regarding the potential link-up during a meeting with visiting LSE CEO Nikhil Rathi on Tuesday.


SEC Takes Another Step Toward Tighter Swaps Regulation



SEC In Transparency Push On Stock Trading (subscription)

Financial Times


U.S. Broker-Dealers May Soon Have To Post More Info On Routing Orders

Lisa Lambert – Reuters


U.S. SEC Changes In-House Trials To Update Rules, Add Flexibility



Traders’ ‘Secret Sauce’ Threatened By CFTC Plan, House Ag Told

Spencer Chase – Agri Pulse


CFTC Staff Approves A Public Comment Extension For A Rule Amendment Certification Filing By ICE Futures U.S.



ESMA Consults On Proposed Central Clearing Delay For Small Financial Counterparties


UK’s FCA Consults On Proposed Central Clearing Delay For Small Financial Counterparties



ESMA Readies MAR Guidelines On Market Soundings & Delayed Disclosure Of Inside Information


ESMA Updates Its MAR Q&AS



Memorandum Of Cooperation Between The Athens Exchange Group & The Tehran SE & CSD Of Iran


PLY: Very interesting deal for both parties as Iran comes out of its previous sanctions purdah.

Private Markets

Tanzania: DSE Shares Rally 100% After Listing

Abduel Elinaza – allAfrica

Dar es Salaam SE (DSE) share price doubled to 1,000 TZS (USD 0.45) each by the end of the first day’s trading.(DSE market cap USD 9.25m)

PLY: Somebody didn’t do their pricing very well then but it is good to see huge demand in the parish for new market content.

Tanzania: New Law Seeks to Press Firms to Enlist in DSE

Abduel Elinaza – allAfrica

The government mulls coming up with a new law and regulations that will compel privatised firms to enlist at the Dar es Salaam SE (DSE) if they fail to do so voluntarily.

PLY: Hmmm, interesting move but not sure forcible listing is a great move – after all some Eastern European exchanges have dabbled with similar moves in the past and it has not added to trading meaningfully or improved the market from what I have seen.


ZAR X To Settle Trades Faster Than The JSE

Hanna Ziady – Moneyweb

Hoping to rival JSE, newly licensed ZAR X will launch on September 1 with real-time settlement. Earlier this week JSE implemented T+3.

Preparatory work with Strate (RSA’s CSD) and Computershare was necessary to develop the technology driving the T+0 settlement system, “which puts ZAR X in the global forefront of rapid, safe and simple settlement”, according to ZAR X CEO, Etienne Nel.

PLY: JSE exchange outmanoeuvred already and with ZAR X clearing into STRATE too…

Special Section: FTI, NSEL, India at the Crossroads

PLY: flat slightly off both FTIL and MCX as Jignesh goes back to jail:

Shah Remanded To ED Custody Till July 18

Shrimi Choudhary – Business Standard

The trial court in the NSEL payments default scam remanded Jignesh Shah, founder of FTIL, erstwhile promoter of NSEL, to custody of the Enforcement Directorate till Monday.

ED: NSEL Defaulters Remitted Rs 114 cr (USD 17m) To Jignesh Shah’s Two Firms

Sadaf Modak & Rashmi Rajput – Indian Express

On Wednesday, while seeking Shah’s custody in a fresh case registered under the Prevention of Money Laundering Act (PMLA) , the central agency told court that transactions on the NSEL platform were ‘bogus and artificially exaggerated’.


SGX Stays Halted After Missing Restart Time

Andrea Tan, Kana Nishizawa & Abhishek Vishnoi – Bloomberg

SGX Not Resuming Trading At 2pm After More Than 2-hour Halt Due To Technical Problems

Straits Times

On Thursday at around 11:50am, SGX released a media announcement that it had temporarily ceased securities trading as at 11.38 am Singapore time. At around 12:30pm, the exchange operator announced it expected trading to resume at 2pm and disclosed the cause of the disruption as duplicate trade confirmation messages being generated. Trading on SGX’s derivatives market continued as normal on Thursday.

SGX announcements: initial – 11:50 AM, Update 1 – 12:39 PM, Update 2 – 1:53 PM: “Member reconciliation files are being generated and the securities market will not resume trading at 1400 hours.  We will advise the market resumption time once member reconciliation is completed.”


New EU Directive May Impose AML Regulations on Bitcoin Wallet Providers

Aaron van Wirdum – Bitcoin Magazine

PLY: So that’s the end of the European cryptocurrency wallet business then.


OpenDoor Becomes First Women-Owned Bond Trading Platform

Markets Media

Following the closing of a $10 million investment round, OpenDoor Trading, LLC (OpenDoor) has become the first U.S. bond trading platform both majority-owned and majority-controlled by women. The funds will be used to support technology and business development of an innovative ‘all-to-all’ trading platform for off-the-run Treasuries and TIPS.  Launch is scheduled for the fall.

PLY: Full marks to OpenDoor Trading on raising $10 million at $40 million pre money. However, I must admit it strikes me as a bit of a sideshow that is is majority owned and controlled by women. Maybe I am missing something but on the day the UK celebrated the second British Prime Minister who had first met one of a half dozen female British heads of state before acceding to office…America on the other hand has a bond platform owned by women. I think this is perhaps more a footnote for the columns than a major selling point? Or maybe this relates to what Clinton spokesman James Carville meant when he said he wanted to reincarnated as the bond market? I certainly dislike the inference that women are “off the run” for another thing.

Bravo for the sisterhood indeed, and welcome to the parish, may there be a high yield to your platform investment but to get PR to focus on the core message would be better than gimmicks taking away from your core message. At $40 million pre – well, ‘you’re worth it, OpenDoor.’

Meanwhile congratulations to OverBond who recently raised CAD $7.5 million for their now launched origination platform in Canada but didn’t disclose a valuation.

QV Premium: The Bond Platforms Rush Brief – Part 2.


CME To List New European-Style FX Option Contracts In Place Of American-Style

Mike Fox – LeapRate

Effective Sunday, August 7, 2016 for trade date Monday, August 8, 2016, and pending all relevant CFTC regulatory review periods, CME will list six new European-style Weekly, Monthly, and Quarterly Option.

PLY: Rem Europeans exercize rarely (usually at expiry), Americans exercize all the time – thus my old maxim teaching options was the highly accurate “in markets Europeans are less flexible.”


Spanish Stock Exchange To Trade First Stock Index Warrants – With 3 & 5 Grade Short & Leveraged Strategy



Osaka Exchange: Certification Received From CFTC For TSE Mothers Index Futures


Career Paths

The LBMA appointed Dr Paul Fisher as the new Chairman of the Association, effective from 5 September, 2016. Paul is due to retire from the Bank of England at the end of July.

Grant Angwin, President of Asahi Refining, will step down following two and a half years of service. For the remainder of 2016, Grant will continue to work alongside Paul as a Co-Chairman to provide support and continuity for the market. Full Member representatives on the Board will stand for election (or re-election) at the 27 September AGM.

PLY: Dr Fisher seems to have a good reputation all round in our soundings, good luck to him.

TheCityUK appointed Miles Celic as its new CEO. Miles will succeed Chris Cummings later this year – a date will be confirmed shortly. QV Premium: Miles Celic To Lead City UK delivers some PLY thoughts.

Eka Software Solutions, the leading global provider of Smart Commodity Management software solutions, appointed Sanjay Singla as GM, CTRM Software.

Financial Calendar

ESMA Closed For Public Holiday On 14 July

20.07 – ICDA Cyber Risk London Conference

20.07 – Record date WSE 2015 PLN 2.36 dividend

21.07 – Adjourned WSE Ordinary General Meeting to resume proceedings

New! 28.07 – ITG Q2 2016 Results – press release

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

Other stories

US Trader Guilty Of ‘Spoofing’ Sentenced To Three Years In Prison (subscription)

Gregory Meyer – Financial Times

Michael Coscia, The first person to be found guilty of disrupting US financial markets by “spoofing” was sentenced to three years in prison on Wednesday.

PLY: I suspect it is fair to suggest there will not be a mass public outcry at any sentenced spoofer.


ESMA Updates Risk Dashboard Following UK Referendum


PLY: Still revving along but in a slightly different way with various concerns…


SEC Proposes Rules to Enhance Order Handling Information Available to Investors


SEC Proposes Amendments to Update & Simplify Disclosure Requirements As Part of Overall Disclosure Effectiveness Review


SEC Adopts Additional Rules Related to Security-Based Swap Transaction Reporting


Statement By SEC Chair Mary Jo White At Open Meeting On Regulation SBSR, The Disclosure Of Order Handling Information, & Disclosure Update & Simplification


Statement At Same, SEC Commissioner Michael S. Piwowar, July 13, 2016

Statement At Same, SEC Commissioner Kara M. Stein, July 13, 2016

Statement At Same, SEC Commissioner Michael S. Piwowar, July 13, 2016

Statement At Same, SEC Commissioner Kara M. Stein, July 13, 2016

Statement At Same, SEC Commissioner Michael S. Piwowar, July 13, 2016

Statement At Same, SEC Commissioner Kara M. Stein, July 13, 2016



SEC Adopts Amendments to Rules of Practice for Administrative Proceedings



FIA Testifies On Importance Of Automated Trading Risk Controls At Congressional Hearing



Abu Dhabi Global Market & Shanghai Free Trade Zone Authority Agree On Bilateral Cooperation



Remarks By US Treasury Secretary Lew At Joint Press Statements With EC VP Valdis Dombrovskis



ESMA Consults On The Validation & Review Of CRAs’ Methodologies Guidelines



EC: Speech By Commissioner Jonathan Hill At The European Parliament On The CMU, Brussels, 13 July 2016


QV Premium: EU CMU Brief.


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