JUNE 21 2017

Good Morning and Welcome to Exchange Invest Issue 1020 which corresponds to the year AD when the city of Saint-Germain-en-Laye was founded and King Canute the Great codified the laws of England.

Euro Clearing Essentials:

a) 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.

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

In Today’s Exchange Invest

Clearing aforethought as the Mansion House speeches emerge after the dinner’s cancellation last week while there are mixed opinions from the EU mainland with, unsurprisingly, a French central banker, doing the heavy lifting of protectionism.

Sad to see Sharon Bowen stepping down from the CFTC. Sadder still she cites the loneliness of being a duopoly of Commissioners as the reason for her resignation. It takes two to tango and it takes 2 parties to really mess up American bureaucracy.

And there’s more, happy scrolling:

In BigWorld

Uber CEO Travis Kalanick resigns as CEO – there had been too much talking already would be one man’s view of the issues while Saudi King King Salman has reoriented royal succession in favour of his son Mohammed bin Salman as crown prince. Meanwhile any coronation of Democratic ambitions to defeat Tump presumably heads back to legal procedures as electoral victory is postponed again with another Republican special election win. This time in Georgia. Over in Britain the Queen’s speech demonstrates the level of Conservative chaos – if PM Mrs May had any clue/empathy she would know that bringing the Queen down to London during Royal Ascot week is a gaffe of the first order. Meanwhile the DUP want to ensure that the magic money tree fed trough of Ulster funding is more than the half empty they perpetually perceive while the Labour party are eager to squat or outright steal the property of the rich. All very 1974.

Back in the places where apparently socialist government doesn’t overly trouble the marketplace, Hong Kong’s Li Ka-Shing is heading for retirement, perhaps on his upcoming 90th birthday in July 2018. With a personal net worth of $33 billion, it’s a pity the man dubbed Asia’s Warren Buffett isn’t staying on longer, frankly, he is better able to deliver economic growth than, well 26 out of 27 European Prime Ministers I can think of.

Public Markets

Carney: Moving Euro Clearing Out Of London Is In No-One’s Interest
City AM
Bank Of England’s Carney Warns Brussels Off City Land Grab
Evening Standard

PLY: Presumably that “no-one” means ‘neither UK, EU nor Goldman Sachs.’ …Also Standard mentions Japanese ‘back to backs’ in passing, another possible avenue to raise costs and make markets less efficient.

NB If you are lost in the miasma of CCP clearing and Euro denominated derivatives, don’t forget my CapX article from last week: The EU’s euro clearing plan is an act of protectionist self-harm which seeks to explain the main issues.

Leave The Central Counterparties Alone! UK’s Angry And Justified Ultimatum To Europe
FinanceFeeds (blog)

PLY: Megarant from Andrew Saks McLeod which begins with the hyperpithy: “CCPs in the hands of technologically bereft socialist siesta countries with no financial markets economy, massive taxes and huge state and ECB dependency would be the kiss of death.”

Forcing Euro Clearing Out Of London May Be Justified: ECB’s Coeure

PLY: “Risk” is being redefined by those of blind faith in the Eurozone (qv what other faith might one have?) and here French central banker Benoit Coeure means “risk” insofar as only micromanaged control of the Euro can help the half-baked recipe survive without curdling. The problem is endless protectionism (as opposed to market based testing) will kill the Euro – particularly with its multiple design flaws, since exacerbated by crass political mismanagement). Here the ECB board member is making an ugly incursion into setting margin rates and other tuning of clearing which must be left to management, not politically motivated shenanigans which are truly a ‘risk.’

Original speech here: European CCPs After Brexit – Benoît Cœuré, ECB Executive Board member at GFMA, Frankfurt am Main, 20 June 2017

Banks Need New UK-EU Regulatory Process After Brexit, Says Hammond

PLY: Chancellor Hammond may be boring, dripping wet and way way too lax on the deficit (Osborne mark 2in other words) but he is spot on here:

“First, we will need a new process for establishing regulatory requirements for cross-border business between the UK and EU. It must be evidence-based, symmetrical and transparent. …And it must reflect international standards…Second, cooperation arrangements must be reciprocal, reliable, and prioritize financial stability. Crucially they must enable timely and coordinated risk management on both sides. Third, these arrangements must be permanent and reliable for the businesses regulated under these regimes.”

Japan Exchange Group Extraordinary Report

PLY: To accompany EGM.

HK’s New Board Seen A Big Draw For Startups, Not Secondary Listings

You Can’t Just Survive As A Small Regional Player, Says TMX Boss

PLY: Having been breathtakingly uninspired by Lou Eccleston as TMX CEO – oh, and this headline is nonsense – Eccleston does makes one highly pertinent point: “What’s the really long term business plan for how these businesses work together? That’s what doesn’t normally get articulated…I think if the next [merger] starts with that, it might have a better chance.”

So in other words if those seeking to do mergers could see beyond their own C-suite egos and placating short term shareholders with cost cutting to deliver ebitda…there might be – shockingly! – a means to grow exchange businesses with a plan

…Now if that catches hold, who knows what might be the potential for the parish?

London Stock Exchange Group Plc Transaction In Own Shares

Private Markets

CDSL IPO Oversubscribed Nearly 3 Times On Day 2
Dalal Street Investment Journal

IEX Eyes New Geographic Market, Strategic Investments & Alliances With Global Power Exchanges
Daily News & Analysis

Akel Wants To Abolish ‘Waste Of Money’ Privatisation Unit
Cyprus Mail

PLY: Cyprus privatisation unit which has been handling the 300K Euro review of Cyprus SE privatisation is itself hamstrung without a boss, perhaps killing off a sale of the exchange.

Special Section: FTI, NSEL, India at the Crossroads

Slew Of Reforms On The Cards As Sebi Board Meets Tomorrow
Daily News & Analysis

PLY: NSEL tops the agenda.


Bridge: Improved Settlement And Matching Between Clearstream And Euroclear

PLY: Progress between the leviathan CSDs of Europe, good to see.

Vela To Expand Trading Technology Capabilities With OptionsCity Acquisition – Combined Company Will Deliver An Expanded Set Of Front Office Products And Services, Including Market Access, Risk Management & Analytics

PLY: Interesting acquisition for Vela.

Nasdaq’s BWise And KPMG Align To Provide Comprehensive GRC Solutions

TP ICAP Selects Solace As Foundation For Open Data Movement
Press Release Rocket

Quantave Tests First Ever Trade Life-Cycle Infrastructure For The Digital Assets Market – Delivering A Unified Institutional Gateway To Digital Asset Liquidity

PLY: The key methinks will be whether the digital asset trading environment goes for its own infrastructure or whether it ends up being the preserve of legacy players with legacy systems?

…And before I say any more, permit me to add that perhaps the most constant source of parish frustration to reach my inbox is in fact the legacy underpinnings of vendors in trading structure – “egregious monopolists” is the most generous remark made over the past 5 years. Indeed most remarks are utterly unprintable. …If Quantave can make a mark and help beat the rancid incumbency it will be good for all the parish but first they need to prove their worth in their initial market of digital assets.

IPC Launches Unigy 360 – Market Leading Solution To Combine Benefits Of Unigy® Platform With The Flexibility And Scalability Of The Cloud

PLY: Remember the days of vast gantries holding tape machines spewing out the history of orders? Well seems like it’s over. Finally.


Baltic Exchange Exploring New Freight Indexes For Grains

Column-China’s Plan To Boost Commodity Trading Needs Reality Check: Russell

PLY: PIthy column by Clyde Russell which notes appositely: “But for foreigners to participate, regulatory certainty becomes essential, meaning Beijing must curb its inclination to intervene in the markets if it sees developments it doesn’t like.”

Career Paths

Closing Statement Of CFTC Commissioner Sharon Bowen Before The Market Risk Advisory Committee

PLY: Alas Commissioner Sharon Bowen is departing the CFTC, citing frustration with the lack of confirmed Commissioners. This is a loss to the Commission as she has, with a passion, tackled various topics and her leadership in the crackdown on dodgy forex operators et al has been hugely welcome, as has her sensible thoughts on CCPs on both sides of the Atlantic. She will be missed by all parties who seek better markets and I wish her every success in the future.

GFMA Announces New Executive Director – Global Trade Association For AFME, ASIFMA And SIFMA Appoints Parent

PLY: I Had to include this as even the GFMA release includes this as a sub headline. The lucky applicant gaining the job is in fact Allison Parent but it is not difficult to infer that the bank’s capital markets unions need some, er, adult supervision.

Meanwhile in New York, Nasdaq Conducted their Annual Election for 15 Subsidiary Board Directors to (insert NASDAQ, ‘natch:’) Stock Market, PHLX, BX, ISE, MRX, GEMX for a year. The lucky winners are:
Daniel C. Bigelow, President and Managing Partner of Monadnock Capital Management L.P.

Virgis W. Colbert, Senior Advisor, Miller Coors
Michael J. Curran, retired Chairman and Chief Executive Officer of the Boston Stock Exchange
David J. Frear, Senior Executive Vice President and Chief Financial Officer, Sirius XM Holdings Inc.
Patrick H. Hickey, Head of Market Structure, Optiver US LLC
Thomas A. Kloet, retired CEO and Executive Director, TMX Group, Limited
Eric J. Levine, Director and Head Trader of the Automated Volatility Trading Group, Barclays
William M. Lyons, retired President and Chief Executive Officer of American Century Companies, Inc.
Elizabeth G. Martin, Managing Director, Goldman Sachs
A. Douglas Melamed, Professor of the Practice of Law, Stanford Law School
Jonathan D. Rosen, Managing Director, Citadel Securities
Andrew J. Schultz, Head of Strategic Options Business, Susquehanna International Group, L.P.
Tyler G. Sorba, Co-Head of Automated Equity Options Market Making, Morgan Stanley
Wendy S. White, Senior Vice President and General Counsel, University of Pennsylvania
Thomas A. Wittman, CEO & President NASDAQ Stock Market; NASDAQ PHLX & NASDAQ BX & CEO of Nasdaq ISE; Nasdaq MRX, and Nasdaq GEMX.


Seedrs Wants To Boost UK’s Startup Ecosystem With Alumni Club Re-Launch
Crowdfund Insider

Singapore Crowdfunding Platform Coassets Gets Capital Markets Services Licence
The Straits Times

Other Stories

European Association Of Clearing Houses (EACH) Responds To European Commission Consultation On Fintech

PLY: I hope something good comes out of this discussion but I am not remotely optimistic as it was written with more regulation aforethought… EACH replies logically and thoughtfully.

Statement Of CFTC Acting Chairman J. Christopher Giancarlo Before The Market Risk Advisory Committee Meeting
Statement Of Acting CFTC Chairman J. Christopher Giancarlo On Commissioner Sharon Y. Bowen’s Departure Announcement

CFTC Acting Chairman J. Christopher Giancarlo to Appear Before the Senate for his Nomination Hearing
Have fun and I hope it’s sunny wherever you are, I’ll be back tomorrow on UK general election day…

All the best,


Patrick L Young
Executive Director DV Advisors

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