June 01 2016

elb2PLY: A week before we celebrate that remarkable feat of organisation, not to say almost ostentatious work of invasion, D Day, it’s one of those rubber road impact announcements which excites me this morning. For all the talk of hype, fundraising, demonic plans of world domination and glossy photos of CDS divas turned technologists, SETL just went physical on the DL. Open CSD: fascinating stuff. While all the collectives of bankers and sundry other financial structure folks are still mixing their drinks and poring over seductive tractor photos discerning how to till their DLs, SETL is ready for action. Bring it on.

Meanwhile, elsewhere in the land of delusional folks, the inelegant syllogism of the day is from DB1 which clearly has the usual management / corporate best interest conflict aforethought by not realising a takeover of DB1 would be a good thing where it might install a credible management vision. As always the alpha exuberant caste are hyper-discounting the forthcoming head on collision with the 1000 ton anvil of regulatory fiat.

And there’s more, happy scrolling:

Public Markets

DB1 CEO Braced For Regulatory Scrutiny Over LSE Deal (subscription)

Eyk Henning – Wall Street Journal

Carsten Kengeter criticizes French government after country’s finance minister and central bank chief raise concerns over the tie-up and said his planned merger with LSE wouldn’t close before Q1 2017 due to intense regulatory scrutiny and that U.S. rivals could potentially still torpedo the deal to create Europe’s biggest stock-market operator.

PLY: The bunker mentality writ large (see next story too). Even deal closure in Q1 2017 strikes me as optimistic (and again a waste of time which would be much much more productively used in restructuring the dysfunction within DB1 as opposed to pursuing a deal which relies on a Wonderland attitude by regulators). On the other hand, what a tortured world this is where I can actually agree with something said by the current French government!

Carsten Kengeter – DB1 Could Be Target If LSE Merger Fails


DB1 could become a takeover target if its planned tie-up with LSE flopped, DB1 CEO warned. CME, could become a suitor, Carsten Kengeter told the ICFW Frankfurt international business journalists’ club late on Monday.

PLY: The trouble here is that the rumour mill suggests CME have at least twice had DB1 prostrate itself in front of the Chicago management in what could only be described as the full coquette “American Beauty” pose (with apologies for an image which has now been seared into your retina). I think there is a certain logic (albeit with some antitrust issues too) to buying DB1 but the problem is the Hesse regulator’s naturally Germanic insistence on open markets for others and total concentration in protectionist land, is a tricky thing to balance for those who believe in free markets…which I do believe is seared into the core of the CME credo.

DB1 to Seek Destiny Outside Europe If LSE Bid Fails

Angela Cullen – Bloomberg

“It is my duty to lead DB1 back to the top,” he said. “This merger proposal is one part of our growth strategy and not an end in itself.” Achieving DB1’s goals “by simply growing organically is extremely difficult, if not impossible,” the CEO said.

QV Premium: DB1-LSE Merger Brief.

PLY: Thus the Messiah attempts to cast himself as a truly Wagnerian figure – difficulty is Wotan is way above his pay grade based upon form to date. Maybe Brunnhilde? Hmmm. Will he be “Dein Ewig Teil” or “Heilige Braut?” On current form wags might suggest he appears more Elmer Fudd’s Siegfried…

Seriously this is the thing which happens when you go from management of no fixed direction to hyperactive alpha males – self interest becomes mixed up with corporate benefit and the spirit of rush takes over from the need to actually reform the dysfunctional blob at home.


The Continental Fight Over Who Carries Off The City’s Spoils Should ‘Leave’ Win Is Under Way

Alex Brummer – Daily Mail

We shouldn’t be too surprised that City panjandrum Donald Brydon is a fully paid up member of the ‘Remain’ club. After all, as Chairman of LSE he could barely contain his enthusiasm when his opposite number at DB1 came along with a proposal for a ‘merger of equals’ which would leave the Frankfurt exchange with a majority stake of 54.4% in a European powerhouse.

Writing in the Evening Standard, Brydon sensibly argues that the Brexit debate is not about whether growth will be half a percentage point faster or slower.

PLY: In the entire history of disinformation, the British “Brexit” referendum campaign of 2016 has marked a new low in the misinformation and the level of scaremongering on the part of government is leaving a festering sore. Moscow’s Pravda in 1963 looks like a benchmark of, er, truth, by comparison – at least there were tractors and somebody was producing them. No victory for remain can be enough to do more than duct tape the fissures now for Brussels without a genuine zest for reform (no more integration for a generation at least). I see even the admirably mediocre Donald Tusk has realised this. He may be weak, vacillating and incompetent but he is not as dumbly remote as others in the Eurosphere.

As a footnote to this, I had really hoped Donald Brydon could be more than just another peddler of panic, and indeed a latently anti-American one at that too as he seems to have ignored that NATO supplied the peace while the EU delivers nothing more than growing chaos and an end to prosperity. This is a disappointingly parochial outlook from the Chairman I hoped might return some panache to the position. (Then again he was wise to accept a minority stake of 46% in the merger of equal desperation as we all know his asset base is much less than the Germans’…if only DB1 had management to appreciate their own value).


Paris Stock Exchange To ‘Assert Its Strength’

Samuel White – EurActiv

The Paris stock exchange plans to “assert its strength” to attract international businesses, taking advantage of the potential damage Brexit could do to the City of London.

PLY: Dream on – In the event of a Brexit, London will continue to reign supreme as Europe’s leading financial centre and will prosper more being on the cusp of the EU than lingering within it, even though Brussels’ may attempt more protectionism. Ironically those who often prosper will be the same bag carriers who always supported remain blindly.


Transaction Successfully Completed: PXE Joins EEX Group


Following the successful completion of the transaction, Prague-based Power Exchange Central Europe (PXE) has now officially joined EEX Group.

FAO: Deal announced in January, EEX took a two-thirds stake in PXE.


ESMA Consults On CSDR Guidelines On Participant Default Rules & Procedures


PLY: Important point in the development of pan-European settlement.


BGC Partners Completes Offering Of $300 Million Of 5.125% Senior Notes Due 2021

BGC Partners

Announced last week.


CFTC’s Division of Clearing & Risk Issues No-Action Letter For Shanghai Clearing House


Statement Of CFTC Chairman Timothy Massad On No-Action Letter Shanghai Clearing House


Private Markets

Erste Bank Buys Stake In Budapest SE

Margit Feher – MarketWatch

The Hungarian arm of Austrian lender Erste Group Bank AG (owner of the bourse’s largest broker Erste Befektetesi Zrt.) is buying a 2.3% stake in the Budapest Stock Exchange from the local arm of Dutch lender ING Bank NV. Financial terms weren’t disclosed.

The Hungarian central bank is the majority owner of the Budapest bourse with a 75.8% stake after buying a combined 68.8% stake for 13.2 billion forints ($46.7 million) from CEESEG and Oesterreichische Kontrollbank AG in November.


Macedonian SE: We Are Moderately Optimistic About SEE Link

Focus News

Bulgarian SE: One Of The Goals We Have Set Is Regional Cooperation, Development

Focus News

QV Premium: SEE Link Project Brief.


Dar Bourse IPO Plans Whet Investors’ Appetite


The Dar es Salaam Stock Exchange IPO is proving a huge success as the IPO enters its final week.

QV Premium: Exchange Deals Brief – IPOs.


China Financial Futures Exchange: Hedging Activity Caused Flash Crash


The June futures contracts on China’s blue-chip CSI300 index plunged the 10% daily limit at 10:42 a.m. time on Tuesday, but recovered all its losses within that minute in high volume.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 3.5%, FTIL up 1%.


SETL Launches Blockchain-Powered OpenCSD Platform


PLY: Prosaically it’s akin to the classic Umberto Eco novel “The Name of the Rose.’ Practically, it’s the case that somebody has their open CSD software and everybody else has a broad alliance of press releases and cash allied to a committee structure of diverse and divergent vested interests. Under other folks’ umbrellas who knows what may be sheltered but here SETL has raised the game. Well actually for the first time SETL have actually delivered the pitch – Game On! An OpenCSD delivers all manner of possible solutions in a vast array of market while talk is, well in DL world at least, very expensive for subscribers.

Good work by Peter Randall and the SETL team: a tangible leap forward to a practical and attractive solution. While the other Politburos are still raising money for their very own Umbrella Corporations, the SETL business has built the umbrella. Does that make Peter Randall resemble Milla Jovovich? Perhaps not but it does leave the other cooperatives and amalgams looking decidedly like zombies.


EU Rules On Commodity Derivatives Face Further Delay

Huw Jones – Reuters

Commodity trading firms in the EU must wait longer to see if they will be exempt from tougher rules after regulators and EU officials clashed over details of the so-called MiFID II reform.

PLY: Interesting story as the nitty gritty here looks murky as the EU’s habitual overreach once again exemplifies the dangers of the predatory anti risk mindset which is killing any coherent European economic dream of prosperity – an expensive precaution indeed.


Russian Govt Approves Blueprint For Urals Crude Futures


The contracts are expected to be launched at St Petersburg International Mercantile Exchange (SPIMEX), Russia’s largest commodities exchange, with a view to trade Urals futures on a free on board (FOB) basis of the Baltic Sea port of Primorsk.

PLY: The granular benchmark expansion continues…


SHFE Files For ATS Licence With HK’s SFC

Metal Bulletin

Planning to expand commodity futures, The Shanghai Futures Exchange (SHFE) has submitted an application to the HK SFC for a dealing licence of ATS.


Thomson Reuters Launches 2pm WM/Reuters FX Benchmark For Corporates Valuing Cross-Border Transactions



Dubai Financial Market Launches A New Direct Deals Service – Total Value Must Be AED 200 Million At Least Or No Less Than 3% Of The Capital


Career Paths

Tullett Prebon Alternative Investments (TPAI) announced that Alastair Sword has recently joined as the alternative division’s global head.

Prior to taking up his position with TPAI, Alastair was Head of Asian Sales at Roubini Global Economics having previously been a MD at BAML in London, and most recently in a regional role based in Singapore.

Markets Media reports that Instinet appointed Mark Govoni as President of Instinet LLC, its U.S. brokerage subsidiary. Govoni previously served as Instinet’s head of U.S. sales trading.

Financial Calendar

01.06 – BGC Partners $0.16 dividend payment

01.06 – Record date Interactive Brokers $0.10 quarterly dividend

03.06 – Record date CBOE $0.23 dividend

07-08.06 – FIA IDX

New! 10.06 – CFTC Division of Market Oversight – public roundtable meeting, to discuss certain elements of the Commission’s notice of proposed rulemaking (NPRM) regarding Regulation Automated Trading.

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

Other stories

ESMA Publishes Updated EUSEF & EUVECA Q&A


IIROC Publishes Guidance & Resources To Help Protect Senior Investors



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