June 02 2016

elb2For those with vision, BlackRock is buying ICAP stock (very wise move). For those without vision, you can pool your ignorance with DB1 management who have been on the stump pushing the increasingly nonsensical “Merger of Equal Desperation.”

The boffins in the backroom with the calendar expertise note that today is the anniversary of The Butterfly (In)Effect, the article which first exposed, well a spot of curious and never answered shenanigans at NLX in 2014. (For the whole story there’s also the NLX Brief). NLX has somewhat turned the corner since its bizarre shenanigans in 2014, although I still don’t see it having a coherent future as a STIR platform. I’m not arachnophobic, just pragmatic, there is no value in this approach.

Don’t forget, the FESE Convention – Malta, 15/16th June, interesting event, terrific venue of the Hilton conference centre. Also, ICDA have their upcoming CyberRisk conference in London, July 20th: Secure a place at GBP 295 with the Exchange Invest code YOUNG295.

Public Markets

DB1 Exec: LSE Merger Is “The Last Chance For Europe”

CITY A.M. – William Turvill

Recommended All-Share Merger Between LSEG & DB1: Publication of Scheme Document, Exchange Offer Document & HoldCo Prospectus


DB1’s LSE Takeover May Result in 1,250 Job Cuts

John Detrixhe – Bloomberg

LSE, DB1 Give More Details on Merger (subscription)

Eyk Henning – Wall Street Journal

LSE investors will get to vote on the deal on July 4, while the tender offer for DB1’s shareholders is to end on July 12. Prospectus issued to shareholders says cuts necessary to achieve annual cost savings of €450m by third year after completion.

PLY: Guff guff & thrice (scaremongering) guff. It starts on Page 3 of the presentation with the breathlessly inaccurate claim of being an “Industry Defining & Value Enhancing Combination.” Well that’s a new euphemism for “Merger of Equal Desperation” then. Shareholders who support this dismal deal are hyper-foolish. Rather than defining the industry, the management of DB1 and LSE are desperately trying to catch up with an previously industry defined elsewhere.

DB1 CEO Sees Continued Progress In Talks With Regulators


“CarCrash” says:

LCH and Eurex will remain separate clearing houses after deal

No need to speculate at all on German state of Hesse review of merger

LSEG: anti-trust applications will be filed late in the month of June

LSE’s Xavier Rolet: No need to increase capital at LSEG clearing houses for now

PLY: And if there is no merger of clearing houses, there is no collateral benefit, if none of the above, there is no value to the merger, unless your managerial share options are aforethought. Ergo: bad deal from managers with no clearly proven ability in the modern age to integrate transactions coherently. Rather we have this behind the bike sheds botch up from 2 companies trying to hide their inadequacies as opposed to seeking to deal with them. Then again some have this big bag of de facto swag to take away if they can fool enough folks for long enough that this deal works. So it’s just like the EU – looks lovely from the outside but a certain swaggering arrogance cannot give way to a clear feeling there is an air of denial about the reality of the situation.

LSEG – Total Voting Rights


QV Premium: DB1-LSE Merger Brief


LSEG: Completion Of Sale Of Frank Russell Company’s Asset Management Business


LSEG has completed the sale of Frank Russell Company’s asset management business (Russell Investments) to TA Associates and Reverence Capital Partners for total consideration of USD 1,15 bln (£793m).  Following payment of tax on gains and including earnings from Russell Investments during LSEG’s period of ownership, the expected net proceeds to be realised by LSEG will be approximately USD 920 (£634m), as previously indicated, of which USD150m (£103m) is to be paid annually in four equal cash instalments, starting from 31 December 2017. LSEG has received cash proceeds at closing, net of payment of tax on gains, of approximately USD650m (£448m).

QV Premium: LSE – Frank Russell Deal Brief and Exchange Deals Brief – M&As.

PLY: What began as another wondrous deal in Xavier’s career as the LSE breathlessly hyped the valuation only to come up a touch disappointed…transpired to be the peak of his LSE tenure.  Who would think that within a year he would be reduced to whatever his position is now, EVP of the Tea Trolley and Grand Vizier of the WalMart greeting process, or something.


BlackRock Takes 4.7% Stake In ICAP


BlackRock now holds 30.93 million ICAP shares, worth at today’s prices £133.6m (USD $194m).

PLY: Eighth story of the day and finally somebody can be identified as having coherent foresight. Bravo BlackRock! ICAP’s day in the sun will come – it, as opposed to big fat bulky things without coherent management, is much more the future of Europe. One might even wish to consider parallels between driven visionary entrepreneurs and carpetbagging careerist bankers at this point.


HKEx Eyes Fine-Tune Amid Backdoor Fear

The Standard

HKEX CEO Charles Li Xiaojia said he sees no need for changes in the structure of listing regulations.

SFC & HKEX will soon conduct market inquiries about whether the securities regulator needs to join the IPO process as the last gatekeeper.

PLY: Meanwhile as discussed yesterday, ASX seems to be hell-bent on destroying the listings market for smaller companies in Australia at precisely the moment when the direction of travel is heading the opposite way…


JPMorgan Sheds Light On Currency Trade Practice (subscription)

Financial Times

Guidelines released on rejected ‘last look’ trades comes amid scrutiny by regulators.

PLY: There is no place for “last look” in modern market structure – end of.


Bats Launches Liquidity Management Provider Program


The LMP Program, which was filed with SEC on May 12th, rewards liquidity providers based on their quoting quality in LMP Securities. The list of securities includes all Bats-listed ETPs and certain non-Bats-listed ETPs.


CFTC Issues Two Entities Orders of Foreign Board of Trade Registration to Permit Trading By Direct Access from the U.S.


CFTC issued Orders of Registration to the following Foreign Boards of Trade (FBOT): BM&FBOVESPA, in Brazil and Cleartrade Exchange, an FBOT registered in Singapore.


New MOEX Listing Rules To Come Into Effect On 7 June



Two Years After Qingdao Scandal, LME Bets On Electronic Tracking Of Metal

Melanie Burton – Reuters

LME is expanding its new electronic method of tracking metal in warehouses, as the system launched in April is gaining early traction among some western and Chinese banks, as well as warehousing and metals firms looking to cut risks.


Mifid II Data Rules So Weak MEPs Should Block Them, Investor Body Says (subscription)

Tim Cave – Financial News

Rules intended to cut the amount exchanges in Europe may charge investors for market data are so weak that MEPs should block them, according to an investors’ trade body in the UK.

Private Markets

Central Bank To Sell Stake In Budapest SE In Five Years


Budapest SE (BSE) CEO Richárd Végh: The National Bank of Hungary (MNB) will start to divest its stake in BSE within five years. The Hungarian central bank bought a combined 68.8% stake for $46.7 million from CEESEG & Oesterreichische Kontrollbank AG in November.

PLY: Interesting to hear a defined divestment starting point.


Korea to Open In-house Version of NASDAQ Private Market

Korea Bizwire

Korea Financial Investment Association (KFIA) plans to present what it calls an ‘OTC transaction platform for professional investors’. It plans to revitalize the pre-IPO market by providing a more exclusive platform for the ‘big boys’. The platform was benchmarked off of America’s NASDAQ Private Market.


Sebi, NCDEX Tighten Risk Management Mechanism

Rajesh Bhayani  – Business Standard


Sebi, BSE Bust Stock Market Fraud Through Pakistan-Based Entity

The Economic Times

Clamping down on a suspected case of tax evasion through stock market platform, regulator Sebi and leading bourse BSE have busted a Pakistan-based entity that was being used to lure investors through fraudulent SMSes.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL broadly flat.


CME Granted License to Clear IRS In Japan


CME has been formally granted the status of Foreign Clearing Organisation: CME Clearing, is now able to clear non-Yen interest rate swaps on behalf of Japan-based financial institutions.


ESMA Publishes Updated Q&A On CFDs & Other Speculative Products


Career Paths

Group CFO Stefan Mäder has decided to leave SIX at his own request after six successful years. The successor to Stefan Mäder will be named by February 2017 at the latest. Until then, Stefan Mäder will continue as Group CFO in order to guarantee a seamless transition.

PLY: Is it just me or does it feel as if SIX has a remarkable level of management turnover, particularly for a Swiss corporation?

Financial Calendar

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.

22.06 – WSE AGM – amendment of the agenda

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

PLY: “According to the justification included in the motion of the State Treasury, the addition of this item to the agenda follows from the powers of the General Meeting to elect and dismiss members of the Supervisory Board and aims to strengthen supervision over the Company exercised by the Supervisory Board.” Make no mistake: a new era of totalitarian Communism is happening in Poland but then again it is only a granular change from the previous government.


UK Watchdogs To See If Tougher P2P Lending Rules Needed

Huw Jones – Reuters

Andrew Tyrie, Chairman of the Treasury Committee in Britain’s parliament, said he has asked BOE and the FCA to check if more protections were needed for consumers, and whether platforms needed more capital to withstand downturns.

Other stories

IOSCO & IFRS Foundation To Strengthen Cooperation In The Development & Implementation Of IFRS Standards



SEC Adopts Amendment to Form 10-K Implementing FAST Act Provision



Canadian Securities Regulators Announce Contractual Agreement To Renew CSA National System



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