June 10 2016

elb2Big events on the horizon. Like the FESE Convention next week in Malta, 15/16th June. Meanwhile the French are staging a major display of their synchronised ability to strike at short notice & generally behave with a petulant disdain towards simple economic logic. Ayn Rand never seemed more appropriate: “We can evade reality but we cannot evade the consequences of reality.”

I suppose that’s an apt remark both in terms of French economics (sic) and indeed the mentality of football supporters. Many of the latter are attending some international tournament being masked by the rotting detritus of France’s unresolved refuse which will kick off between the bin bags sometime this weekend. I know nothing about kickball so clearly I’ll go with the presumption that Brazil are doubtless favourites. Or maybe it’s the All Blacks, or…whatever. In better news for the nexus of civilisation and sport, it’s the Canadian Grand Prix and the Belmont Stakes at the weekend.

My thanks to parishioners for reporting what they feel has been an easy ride given to the “Merger of Equal Desperation” justification sheet circulated by DB1-LSE in their apparent quest for antitrust opprobrium. I’ll show you an excerpt below from this week’s Premium special DB1 LSE Marking The Deal for the final time today. Next week I’ll be tackling Brexit in response to various readers’ demands for Premium clarity. Only $300 a year for unique perspective. Great deals for broad corporate enlightenment too.

DB1 Page 3 Industry Defining and Value Enhancing Combination-2

 

Public Markets

Duffy Says He Would Have No Choice But to Move CME If Tax Passes

Brian Louis – Bloomberg

The suggested levy — $1 or $2 per contract, depending on the product — would make many transactions uneconomic, forcing the exchange to leave the state because customers would stop buying and selling, CME Chairman Terry Duffy said. The bill is in early stages and faces long odds of approval.

PLY: The Ayn Rand quotation above applies equally to Illinois’ public sector workers. Plugging the hole of generational overspend in a nation where digital markets may relocate to more friendly climes, in a host of other states, is a suicidal move. Good pushback by Terry Duffy.

 

House Committee Moves To Cut Funding For Financial Regulators

Reuters

A bill to slash funding for the SEC, Internal Revenue Service and other financial regulators passed a key committee in the U.S. House of Representatives on Thursday after a long partisan fight.

PLY: It’s a typical battle to get funding for US agencies but it perplexes me that having asked regulators to do so much more (more than they ought BTW), then cutting their budget amounts to nothing more than an act of incontinent legislative suicide – particularly for the parts of the programme the vast majority sensibly are signed up to.

 

IEX CEO: Stock Exchanges Are Overcharging Investors By Billions Of Dollars

Matt Turner – Business Insider

PLY: One thing I seem to have got wrong in “Capital Market Revolution!” (there are now parishioners whose parents have told them about that tome) was that competition would drive data prices down. Rather the characteristics of data monopoly now sees us facing mergers like DB1-LSE where the only ‘redeeming’ features of the dubious deal are in essence maintaining a pure monopoly on clearing (worrisome and restrictive) and a lot of monopolistic leverage on data…

 

How Nasdaq Watches For Insider Trading

Francine McKenna – MarketWatch

PLY: A pleasant coffee time read as MarketWatch looks behind the GUI to see what happens in traded markets.

 

Brokers & Online Venues Prepare For Brexit Volatility (subscription)

Philip Stafford & Roger Blitz – Financial Times

Retail trading platforms are demanding higher cash balances from their customers for transacting in sterling and UK shares ahead of the country’s referendum on EU membership this month.

PLY: My diary is currently clear for June 24th. I’ll be in my secret batcave surrounded by screens spitting low latency data, sipping my preferred Manufaktura Hanza coffee blend and observing what could be some spectacular markets…

 

HKEX Plans To Develop Industrial User Base For China Metals Hub

Melanie Burton – Reuters

As mentioned yesterday, HKEX plans to develop an industrial user base to back its metals trading hub slated for southern China, pushing to build its commodity business in the world’s No.2 economy, based in the new Qianhai, free trade zone near Hong Kong.

 

Investors Stage Fightback On Mifid II’s Market Data Rules (subscription)

Tim Cave – Financial News

It was no big surprise when exchange groups lobbied hard on what incoming European rules would mean for market data.

More comment on this topic earlier this month.

 

Nasdaq – Prospectus of Senior Notes Due 2023

Nasdaq

Nasdaq publishes the prospectus of its listing of €600 million aggregate principal amount of 1.750% Senior Notes due 2023 on Nasdaq Copenhagen A/S. The prospectus was approved by the Danish FSA on June 9, 2016.

FAO/PLY:This offering was announced in May, while last week Nasdaq announced and priced a public offering of $500,000,000 aggregate principal amount of USD-denominated 3.850% senior notes due 2026. Both offerings are funding the ISE acquisition.

 

MSEI, MCX May Settle Warrant Cancellation Dispute Out Of Court

Shrimi Choudhary – Business Standard

MCX’s appeal against MSEI for extinguishing its 416 million warrants in the equity bourse is pending before the Bombay HC.

 

Osaka Exchange: Night Session Cancellation The Launch Date Of Next J‐GATE

MondoVisione

The night session on July 15, 2016 (Trading day:July 19, 2016), which is a business day preceding the launch date of Next J‐GATE, will not be held at OSE.

Private Markets

TASE Acts To Stem Flight Of Investors (subscription)

Sara Toth Stub – Financial News

The Tel Aviv SE (TASE)’s new building, opened at the end of 2014 and costing nearly $100 million, was supposed to give the bourse a boost into the modern era. But trading volumes on April 10 dropped to the lowest daily level since 2003 and concern is growing about how to keep the struggling exchange alive and relevant to Israel’s robust high tech-based economy.

PLY: StartUP nation has a lot of dynamism. TASE looks a lot more like it is only coming to terms with the Old Testament. I am not sure where the bottleneck exists (and it may not be where one would immediately think). However it seems staggering that Tel Aviv cannot justify a dynamic exchange when elsewhere in the world there are so many exchanges which have grown magnificently thanks to the influence of the children of Israel from both top down and bottom up… (Anarchic suggestion: maybe they need something out of the box, like an Irish gentile to shake things up).

 

UK Start-Up NetOTC Blames New Swaps Rules As It Halts Operations (subscription)

Financial Times

NetOTC Announces Its Decision To Put Its Initiative For Margining Non-Cleared OTC Derivatives On Hold

MondoVisione

PLY: An impasse within an impasse seeks a segue, bilaterally or multilaterally I suppose.

 

Tokyo Commodity Exchange & Thailand Futures Exchange Sign MoU

MondoVisione

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL down 2%, Twitter very agitated that Mr Modi has been talking a lot, visiting the US, advocating Indian markets and yet seems to be incapable of pushing a solution to the NSEL farago.

Technology

Lending Club Website Goes Down, Cites Data Center Outage

Heather Somerville – Reuters

PLY: Rain, Pouring, Unconditional: single ledger entry as the new digital pith goes.

 

ICE Clear Europe: Clearing House Tech Lagging Behind

Joe Parsons – Global Custodian

Paul Swann, CEO of ICE’s European clearing house, said that current systems used by CCPs will not be able to facilitate increasing volumes of cleared OTC derivatives products.

PLY: Interesting comment from Paul Swann particularly as his organisation is ahead of the curve and is therefore not…well if you’re uncertain who might be behind with their technology, feel free to forward guesses on the back of an old punch card.

 

How a Supercomputer Is Ready to Mint Money Out of Mexico’s Stock Market

Benjamin Bain & Patricia Laya – Bloomberg

On a gated residential street about an hour’s drive south of Mexico City’s main business district lives Breogan, a $350,000 computer that Alberto Alonso built to shake up the nation’s stock market.

PLY: Nice profile of what has been happening for some years behind the net curtains in all manner of parts of suburbia across the world.

Products

CFTC Proposes Additional IRS For Clearing Requirement

CFTC

U.S. Proposal Would Require Clearing More IRS

Reuters

PLY: Harmonising the US to clear products already clearing in other jurisdictions (all after all from the Pittsburgh G7 principles of 2009) makes eminent sense.

 

Now, SEBI Wants To Clamp Down On Unsponsored Depositary Receipts

Reena Zachariah – The Economic Times

After curbs on participatory notes, India’s capital market regulator is proposing a clamp down on unsponsored depositary receipts (DRs).

Career Paths

ISDA appointed Katherine Tew Darras as General Counsel.

ISDA also appointed  two senior executives to its BoD:  John Dabbs, Global Head of Prime Derivatives Services at Credit Suisse, and Kim Taylor, President of Global Operations, Technology & Risk at CME.

PLY: Good to see Kim Taylor joining the ISDA board as the first of a series of annual rotations by major CCPs.

Financial Calendar

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

New! – 27.06 – CFTC’s Market Risk Advisory Committee – details here

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

Analyst Notes

CBOE Downgraded By Zacks From “Hold” To “Sell” Rating

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

PLY: Certainly CBOE need to do a better job of getting their message to the rest of the world but the opening of a London office as confirmed this week ought to help

Crowdfunding

LendingClub Held Talks on Funding Deals With Och-Ziff, Soros, Third Point (subscription)

Telis Demos & Peter Rudegeair – Wall Street Journal

Troubled online lender LendingClub has met with at least three large hedge funds to discuss deals in which they would commit to buying billions in loans and get the right to own shares.

LendingClub Needs a New Leader

Michael P Regan – Bloomberg

The red flags at LendingClub are piling up fast.

PLY: This year’s summer hunting season is clearly targeting LendingClub.

Other stories

SEC Issues $17 Million Whistleblower Award
SEC

 

OCC Commends EC Extension Of QCCP Deadline

MondoVisione

OCC commended the EC for its decision to extend the deadline for CCPs to be deemed qualifying central counterparties (QCCP) until December 15, 2016.

 

Keynote Remarks Of CFTC Chairman Timothy Massad Before The Global Exchange & Brokerage Conference, New York, NY

MondoVisione

PLY: Chairman Massad marks his agency’s performance of the past year – at least it’s more objective than a DB1-LSE deal proposal.

 

Ontario Securities Commission Publishes 2016-2017 Statement Of Priorities

MondoVisione

The Ontario Securities Commission (OSC) published its 2016-2017 Statement of Priorities,which sets out priority areas where the OSC intends to focus key resources and actions for the coming fiscal year, as well as the expected outcomes.

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