JULY 14 2017

Welcome to Issue 1036 of Exchange Invest. France (and ESMA) have a day off to celebrate the speech of Camille Desmoulins in the Cafe du Foy on July 12 which turned into the storming of the Bastille on July 14th. This year Donald Trump is watching the marching unfold along the Champs Elysee. Meanwhile it’s a fascinating day for anniversaries, as Ingmar Bergman, Gerald Ford, Woody Guthrie, Terry Thomas and Gustav Klimt were all born on the day Adlai Stevenson, Marius Petipa and Billy the Kid died. What a shame they couldn’t have all met together, it would have made an interesting soiree.

Euro Clearing Essentials

1) Prosperity UK Panel – Brexit, Euro Clearing & Financial Market Structure: panel with Barney Reynolds, Jeff Sprecher, Michael Spencer and one Patrick L Young lurking in the background.

2) My CapX article explaining The EU’s Euro Clearing Plan Is An Act Of Protectionist Self-Harm.

In Today’s Exchange Invest

India appears to be a common thread today, an MSEI whistle blower alleges dubious payments, NSE looks like it battlecruiser still struggling to find its bearings after a few broadsides, let alone find its way into port.

And there’s more, happy scrolling:

In BigWorld

I was rather impressed by a UK audit body which endeavoured to suggest that auditors are not there to find fraud – alas in the mainstream media it came out in a fashion which suggests, well they might require, er, media auditing before speaking?

Meanwhile the legacy media is in full on silly season which means endless shades of nothing burger as they attack Trump (no sign of compliment if he does anything right either) and an endless wall of negativity about Brexit. This contrasts elegantly with their usual objective reporting at other times of the year.

Public Markets

Brief-Ihs Markit Announces Closing Of Senior Notes Offering

BSE Gets Active To Show Off Its Tech Edge After Big NSE Fiasco
Economic Times

PLY: The Bombay SE was already convinced its tech was the greatest the parish hass ever seen. Now that NSE’s tech has been falling over, this has only encouraged yet more chest beating…

LME To ReBoot Electronic Metals Storage System After Weak Uptake

LME is trying revamp its digital metal storage system LME shield.

PLY: I think the warehousing issues previous to the Shield introduction were an issue as certainly the Kynetix software has proven splendid.

Concerns Raised Over MiFID II Systematic Internaliser Rules
Financial News

High-speed trading firm Optiver has identified a perceived flaw in the systematic internaliser rules embodied in Europe’s revised Markets in Financial Instruments Directive. The rules are intended to push more share trading through public exchanges by requiring banks’ dealing desks and other proprietary trading firms to apply for SI registration, but Optiver says the rules could have the opposite effect as traders may circumvent them and trade privately through electronic networks.

SECP Chief Meets Capital Market Professionals At PSX
The Nation

They’re The World’s Fastest Traders . Why Aren’t They Thriving?

“The pure speed trades are squeezed on two sides, by rising cost of infrastructure and low volatility, which gives you less reward for being the fastest,”

NEX Pulls Political Donation Resolution After Backlash
Financial News (subscription)

Michael Spencer’s NEX Group pulled a planned resolution seeking shareholder approval to make political donations of up to £100,000 at the eleventh hour.

PLY: Not sure I can judge this as the finest day for shareholders – it does seem rather an attack on corporate liberty given the free market stance of NEX which is not exactly rampant in other multinationals which represent Britain’s corporate blob

London Stock Exchange Group Plc Transaction In Own Shares

Private Markets

Can The National Stock Exchange Stop Screwing Up?

India’s largest stock exchange must clean up its act.

PLY: Once the benchmark, NSE is in danger of losing its pedestal.

SEBI Probing MSEI On ‘Irregularities’ Complaint
The Hindu

PLY: Whistleblower story by Ashish Rukhaiyar. “The letter alleges that a loan of ₹10 crore taken from ICICI Bank was used to give cash incentives to brokers to push trading volumes of currency derivatives, which is effectively the only functional segment of the exchange,” said a person on condition of anonymity.

Worrying that MSEI had not replied before the story went to press as clearly it could prove explosive if the allegation is proven.

NSE Panel Rules Out Collusion By Staff In Unfair Access Case

The 2 member internal Panel says decisions leading to unfair access a result of procedural lapses due to lack of a written policy.

PLY: Which only makes NSE sound more like amateurs’ night at the bourse…a worrying lack of organisation for an enterprise formerly prized for its technocratic excellence in so many other areas. Clearly the consulting classes will be deploying this as a case study for their services in documentation and process…

Former Officials Share Experience On 25Th IDX Anniversary
Jakarta Post

A presidential decree was issued on July 13, 1992 to privatize the Jakarta SX, while the IDX was formed in October 2007, when the Jakarta Stock Exchange (JSX) merged with the Surabaya Stock Exchange (SSX).

DSE Holds Meeting With CSE, CDBL
Financial Express Bangladesh

A five-member committee was formed on Thursday after a tripartite meeting between the Dhaka Stock Exchange (DSE), Chittagong Stock Exchange (CSE) and Central Depository Bangladesh Limited (CDBL). The committee will take steps to form a CCP ‘Clearing and Settlement Company’ as soon as possible.

Special Section: FTI, NSEL, India at the Crossroads

No news today.


Vela To Acquire Object Trading Complementing Its Recent Acquisition Of OptionsCity – Acquisition Enables Vela To Offer A Comprehensive Software And Managed Services Solution Across The Entire Electronic Trading Workflow

PLY: Congratulations to Steve Woodyatt on selling Object Trading. As I recall, Steve attended the Australian launch party for “Capital Market Revolution!” in 1999 so he was thinking ahead in tech long before anybody coined the word “fintech.”


Britain Floats New Sovereign Ipo Rules In Bid For Aramco Prize

PLY: Britain enters aggressive dive to get to the bottom to accommodate Saudi Aramco.

Listed Infrastructure Is #fake_infra – EDHEC Study Shows That Listed Infrastructure Equity Offers Zero Diversification Benefits, Is Not An Asset Class

PLY: EDHEC reckons the emperor of infrastructure needs a parka jacket to cover their exposure…

Video: Will We Buy And Sell Audiences On The Stock Exchange
Which-50 (blog)

PLY: Interesting.

Ukrainian Exchange Begins To Trade New Futures Contracts: USD-JPY, GBP-USD And Silver

Career Paths

Stock Exchange Regulatory Head To Step Down
Bailiwick Express

Advocate Diana Thompson, the current head of The International Stock Exchange’s (TISE – formerly Channel Islands SX) regulatory arm, is stepping down to a new legal practice with her husband, Advocate David Thompson.

F. William McNabb III plans to step down as CEO of Vanguard Group after leading the indexing pioneer through a decade when it emerged as the world’s second-largest money manager. He will be replaced by a fellow longstanding insider Mortimer J. “Tim” Buckley, currently Vanguard’s chief investment officer.


Women Outperform Men In Seed Crowdfunding, According To Analysis By PWC & The Crowdfunding Centre

Other Stories

New Speech By Ashley Alder, Chief Executive Officer, Hong Kong’s Securities And Futures Commission: Speech At HKSI Luncheon

ESMA Issues Sector-Specific Principles On Relocations From The UK To The EU27

ESMA Consults On Certain Aspects Of The MiFID II Suitability Requirements

FIA June 2017 SEF Tracker

Legatum Institute Launches The Legatum Financial Services Forum
Legatum Institute

PLY: Legatum release on the FSNF being absorbed into Legatum’s excellent suite of Brexit Prosperity approaches.
Enjoy your weekend.

Lest it may be of interest, I intend to spend at least part of mine reflecting on the 75th anniversary of the Maltese people receiving the George Cross at the height of their bombardment in 1942 when the island was besieged and on the verge of surrender to the Axis powers.

If you want a remarkable read of human valour far beyond our parish, google “Operation Pedestal.” This page gives a good summary of a simply surreal convoy. 60 ships were involved from the Royal Navy (including the SS Ohio , one of two fast US merchant ships lent by President Roosevelt’s express order to assist Malta). The nation was all but bereft of fuel and in the end SS Ohio entered Valletta as little more than a scrap…but it was a sinking hulk full of fuel, strapped to 2 destroyers. Malta was relieved.

A single Supermarine Spitfire will commemorate the George Cross anniversary at circa 1810 CET Saturday flying across the Grand Harbour.

Thanks for reading Exchange Invest.


Patrick L Young
Executive Director DV Advisors

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