June 08 2016

elb2IDX London is in into its second day, alas other projects have unfortunately kept me away this year. The panic at DB1 seems to be mounting as CarCrash assured everybody they would benefit from DB1’s acquisition of LSE – even his competitors. At least he has one thing correct at last. Meanwhile the Merger of Equal Desperation received an internal setback when the DB1 staff requested Frankfurt as the HQ for the German takeover. Doubtless this will make the Hesse regulator so much happier about rubber stamping this deal – not!

Many of the big names in the exchange world can be found today at Sandler O’Neill’s annual Rich Repetto-fest in New York.

Meanwhile, the IHS-Markit leadership line up explicitly notes the accession of Lance Uggla to CEO in due course while those who wonder how the EU could ever be a struggling economic block, might appreciate more clearly, given that Jerome Kerviel just won his unfair dismissal suit and gets a half million for losing Soc Gen about 6 billion.  So if you stick by the rules in London, they keep your bonus until it is only good to pay for palliative care in an OAP home whereas in France if you deceive the system and nearly bankrupt your employer, it’s half a million in cash with a rap over the knuckles for the bank being so unreasonable as to not reward payment for abject failure on every level. Well, in the latter part, as goes France, so goes the Euro blob I suppose.

Thanks for all the feedback on my inadvertently marking the DB1-LSE deal as if it was a coherent piece of study. QV Premium post DB1 LSE Marking The Deal. A sample page is below, the rest makes even better reading and in a world of 300 million in fees, it puts the $300 PA sub to EI Premium into perspective…

DB1 Page 3 Industry Defining and Value Enhancing Combination-2

Don’t forget next week’s FESE Convention – Malta, 15/16th June, where I am chairing a terrific panel on the EU funding outlook while ICDA have their upcoming CyberRisk conference in London, July 20th: Secure a place at GBP 295 with the Exchange Invest code YOUNG295.

Public Markets

ICAP Annual Report 2016


vs 2015:  £1.2b ($1.74b), down 6%, trading profit before tax £203m ($294m), down  11%, profit before tax £89m ($129m), down 6%.

PLY: Marking time before the digital butterfly of Newco emerges in the next market spring…


UK’s CMA: Broker Merger Faces An In-Depth Investigation – Tullett’s Anticipated Acquisition Of ICAP’s Voice/Hybrid Broking Business Faces Being Referred For An In-Depth Investigation By The CMA


Discussed yesterday. QV Premium: Exchange Deals Brief – M&As.

PLY: Clearly the oil parish is kicking up a fuss but I am not sure there is much they can do. An annoying issue for ICAP-TNT but not much more – rather they will be delighted that the bulk of the deal is clear. Onwards and upwards for both parties.


Kengeter: Europe Needs DB1/LSE Merger

David Wigan – Reuters

European exchanges account for around 20% of global exchange market capitalization, compared with 41% for the US and 33% for Japan.

PLY: So what Carcrash is saying is that actually by bulking up 2 entities which must by their very nature retain separate platforms for all aspects of their business (including the primary bits which directly contravene any sensible interpretation of antitrust) this is good for Europe. What he has in fact identified is the huge potential in Europe if there is an ability to create single entities but as DB1 ought to already appreciate Europe’s problem is being an array of nation states – the United States…well the clue is in the title.

Kengeter: LSE Merger Would Be Good For Rivals (subscription)

Financial Times

PLY: It already is. Both DB1 and LSE are wasting vast resources as well as making huge discretionary spends without any clear coherence in running their businesses day to day which both need a lot of attention. CarCrash is gifting hegemony in delivering market services to his rivals while opening a window for smart deals while he pursues a pigheadedly dumb one. For once I cannot agree with him more. However quite why shareholders are putting up with this ridiculous fiasco which won’t end well, is anybody’s guess.

DB1 Workers Demand HQ Change in LSE Deal

Carolynn Look & Angela Cullen – Bloomberg

DB1’s works councils demanded in a June 2 letter that Frankfurt be the HQ of the group post LSE acquisition.

QV Premium: DB1-LSE Merger Brief.

PLY: I do appreciate, just as Frankfurt doesn’t, that it is a highly marginal financial centre driven more by EU fiat and Germany’s innately protectionist brand of selfish mercantilism than anybody’s desire to trade there…To be fair, the original DB1 vision was a huge success and back in the days when it had vision, it propelled the Frankfurt as a major financial centre player concept. That was before DB1’s momentum died and we ended up with the hectoring defeatism of “one move or the kid gets it” management approaches petulantly refusing to believe that NYSE-DB1 was impermissible on any logical reading of antitrust (which leads to why DB1-LSE is even worse of course).

So, let me see, the workers don’t like it, the local politicians rightly realise now (a tad late) that DB1 is trying to ease its way out of Frankfurt – and have a veto to stop this happening – and er, er, is that an anvil unable to offset the forces of gravity I see above me…?


CBOE to Open London Office in July


The London office (CBOE’s first overseas) will be located in the Leadenhall Building at 122 Leadenhall Street, London EC3V 4AB, headed by Matthew McFarland, director of global client services.

PLY: Good to see CBOE raising their profile overseas. They have lost international visibility since Bill Brodsky stepped down as CEO.


HKEX To Establish National Spot Metals Platform In China Early Next Year (subscription)

Laura He – SCMP

HKEX is currently building a trading system and plans to set up a national platform for spot metals trading in the Qianhai special economic zone in Shenzhen and hire appropriate talent. (Presentation by HKEX Co-head of Market Development Li Gang – here; Presentation by HKEX COO Trevor Spanner about LME updatehere).


LME Faces New Challenge, This One From Its Own Members

Andy Home – Reuters

PLY: Andy Home argues the LME members are frustrated that their closed shop is being opened up by allcomers, like Jump Trading…


JSE Confirms It’s All Systems Go For The SA Equity Market Move To Shorter 3 Day Settlement Cycle – Transition Aligns South Africa To Global Standards


PLY: I think folks in the most dynamically traded markets have broadly managed T+2, Maybe “aligns” means something different in South Africa…


Nasdaq Files Form 8-K Announcing Entry Into Material Definitive Agreements & Other Events


Both the Supplemental Indenture and Underwriting Agreement relate to the sale by Nasdaq of $500 million aggregate principal amount of Senior Notes due 2026.

Private Markets

Vietnam Mulling Stock Exchange For Startups

Nguyen Thi Bich Ngoc – Deal Street Asia

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL slightly up.


ICE Not Convinced Of Blockchain Advantages

John Bakie – The Trade

Speaking at IDX, ICE CEO Jeff Sprecher says it remains to be seen if blockchain can make markets better, cheaper and faster.

PLY: While DB1 and LSE are spouting fluff, ICE has a laser like focus. Blockchain / DL is a cool tool but the linearists see it as a panacea for all ills. Happy and Medium need to conjoin harmoniously to make a useful ledger.


Blockchain Technology Gets a Hearing Inside the Fed’s Headquarters (subscription)

Paul Vigna – Wall Street Journal

The blockchain has made it to the Eccles Building.

PLY: Surely inevitable. Everybody else is on the bandwagon, the Fed will want to understand the issue better.


Japan’s FSA: The Second Meeting Of The Panel Of Experts On FinTech Start-ups



Bring On the Blockchain Future

Editorial Board – Bloomberg

Could the technology behind bitcoin, the alternative currency much loved by anarchists and drug dealers, make the world less vulnerable to financial disasters?

PLY: With such a blithely inaccurate introduction, Bloomberg reduces itself to reading like US supermarket checkout impulse buy fodder. (What next “Kanye West’s take on QE is worth considering?”). For the record, the US dollar is beloved of drugs dealers by a factor so close to 100% as to render Bitcoin statistically insignificant.


Bucharest SE Debuts Trading In Warrants


PLY: Been on the cards for years but the tricky issue remains the paucity of the Romanian investor community and the strength of OTC platforms…


ICE Benchmark Administration Announces Bank of Communications as a New Direct Participant to the LBMA Gold Price


Another Chinese bank, Bank of Communications, has been approved by ICE Benchmark Administration (IBA) to participate in the IBA gold auction from June 8, 2016.

Other Chinese Direct Participants to the LBMA Gold Price are: Bank of China, China Construction Bank, Industrial and Commercial Bank of China (ICBC).

Career Paths

CBOE’s London office will be headed by Matthew McFarland, director of global client services.

IHS & Markit announced senior executive leadership appointments for IHS Markit following the consummation of the proposed merger of equals that was announced on March 21, 2016. The appointments will be effective upon completion of the proposed merger transaction, which is expected to close in H2 2016.

Jerre Stead, IHS Chairman & CEO, will assume the role of Chairman of the BoD & CEO of IHS Markit. Lance Uggla, Chairman & CEO of Markit, will be President & a member of the BoD of IHS Markit. Mr. Uggla will assume the role of Chairman of the BoD & CEO of IHS Markit upon Mr. Stead’s retirement on December 31, 2017. Mr. Uggla also will be the Chief Integration Officer for IHS Markit leading the process and teams that will integrate IHS and Markit into a single, efficient and high-performing business.

The senior executive leadership team members comprising the IHS Markit Office of the CEO and reporting to Mr. Stead are:

Daniel Yergin will become Vice Chairman of IHS Markit. Mr. Yergin is currently Vice Chairman of IHS. Todd Hyatt will become EVP & CFO for IHS Markit. Mr. Hyatt is currently EVP & CFO for IHS.

Shane Akeroyd will become EVP-Global Head of Account Management & Regional Head of Asia Pacific, based in HK. Mr. Akeroyd is currently Head of Sales for Markit. Jonathan Gear will continue his responsibilities as EVP-Resources & Transportation for IHS Markit. Mr. Gear currently holds the same position for IHS leading the business lines in Resources and Transportation, which include: Energy, Chemical, Automotive, Aerospace Defense and Security, and Maritime and Trade. Sari Granat will become EVP & General Counsel for IHS Markit. Ms. Granat is currently General Counsel for Markit. Randy Harvey will become EVP & CTO for IHS Markit. Mr. Harvey currently is SVP & CTO for IHS. Adam Kansler will become EVP-Financial Markets for IHS Markit. Mr. Kansler is currently Co-Head of Information for Markit. Yaacov Mutnikas will become EVP-Financial Market Technologies for IHS Markit. Mr. Mutnikas is currently Co-Head of Solutions for Markit. Jane Okun Bomba will become EVP & Chief Administrative Officer for IHS Markit. She is currently SVP-Marketing, Chief Sustainability & Communications Officer for IHS. Jeff Sisson will become EVP & Chief of Staff for IHS Markit. He is currently SVP & Chief Human Resources Officer for IHS. Michele Trogni will become EVP-Consolidated Markets & Solutions for IHS Markit. Ms. Trogni is currently Co-Head of Solutions for Markit.

The IHS Markit BoD and other leadership roles are expected to be announced around the time of the closing of the merger.

PLY: Interesting to see the future leadership of Lance Uggla precisely codified in this announcement.


SocGen Ordered To Pay Rogue Trader $500,000 For Wrongfully Firing Him

Chine Labbe – Reuters

A “rogue trader” who cost Societe Generale billions of euros in losses won a wrongful dismissal case on Tuesday when a labor court ordered Jerome Kerviel’s former employer to pay him 450,000 euros ($510,000) in compensation.

PLY: <<Ouah!>> as the dogs say in French. I can get the bit that Soc Gen may have had dubious management but clearly my not having a legal background means I don’t quite follow how JK gets rewarded for his losses. Then again the French government gets paid to be an abject failure, so I suppose there is a bit of that oxymoronic concept, gallic logic, in here. Good to see the unions defended him – doing their bit for the average worker once again.

Financial Calendar

07-08.06 – FIA IDX

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

10.06 – Record date CME $0.60 Q2 2016 dividend  

10.06 – Record date Nasdaq $0.32 quarterly dividend

10.06 – TMX $0.40 dividend payment

22.06 – WSE AGM – amended agenda

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

Analyst Notes

LSE “Hold” Rating Reissued By Numis Securities – GBX 2,700 Target Price

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.


LendingClub Stumbles Anew, Delaying Meeting With Investors

Noah Buhayar & Jennifer Surane – Bloomberg

LendingClub once the darling of a Silicon Valley movement looking to supplant banks, abruptly adjourned its annual shareholder meeting Tuesday, saying it wasn’t ready to address investors after a leadership shakeup last month.

PLY: This is such a fiasco, it almost makes DB1 comms look competent – and that is a quantum stretch! Such an action suggests LendingClub may be in disarray. Very very unsettling for stockholders.


Monetary Authority Of Singapore To Improve Access To Crowd-funding For Start-Ups & SMEs


Other stories

IOSCO Issues Statement On Non-GAAP Financial Measures To Assist Issuers In Providing Clear Disclosure For Investors



Opening Remarks By SEC Chairman Mary Jo White At The Investor Advisory Committee Meeting


Remarks By SEC Commissioner Michael S. Piwowar At Same



Remarks Of CFTC Chairman Timothy Massad Before The CCP12 Founding Conference & CCP Forum, Shanghai, China


PLY: That CCP12 has formed as a legal entity and makes itself public with a conference in China, is a telling development in and of itself.


ASIC Consults On A Regulatory Sandbox Licensing Exemption


PLY: Why do I worry that such a development from ASIC is likely to be a “who allowed you to bring that spade in here?” and “has everybody measured their buckets to ensure they are the correct diameter?” kind of venture…

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