June 22 2016

elb2Tomorrow, in a move which has significant impact upon the market structure parish, the British people have the chance to redefine Europe.  The EU is failing and, without reform, is finished. How long that decline takes I have no idea but I doubt the 20% youth unemployment of the eurozone is sustainable for much longer. The French economy is a neverneverland construct of the most surreal disdain for the realities of economic gravity and bar Malta, the Mediterranean is a festering debt time bomb of bad banks, sovereign debt and unemployment. In an EU which has failed every audit(!), where central functionaries appear to become more deluded the higher they ascend up the greasy pole, it is difficult to see how the protectionist customs union can sustain itself as is. The EU represents a disastrous single currency, an unresolved debt crisis and has engineered conspicuous geopolitical chaos wherever it has sought to extend its ‘influence’ (sic) – the economic migrant / refugee shambles being only the latest failing in this regard.

I have explained the position more fully in Premium – and if you have not subscribed, once again you will be missing out, albeit this daily newsletter provides a copious quantity of data for free…

However, I note with interest that an EU wide poll by the Bertelsmann Stiftung finds that 54% of EU citizens want the UK to stay in the EU.

Some might see an inferred merger of equals formula which denotes a deal of dubious merits.

Thus I feel the UK has no choice tomorrow. Staying in is to be part of the ongoing economic stasis (at best) of the EU which is being managed for decline by President Juncker’s own admission. It is depressing to witness firsthand entrepreneurship being crushed by the wanton ignorance of an EU blob obsessed with chasing multinational prey and destroying micro businesses as a result. The more I have travelled and the more I have witnessed, the greater I realise that the blob cannot see the damage of Europe from their ivory towers in London, Brussels, Frankfurt or wherever.

Britain can get ahead of the chaos tomorrow but either way, whatever the result the EU is doomed in the long term – unless it reforms. Only the shock of a Brexit vote might get the EU moving.

Markets will be volatile in the febrile atmosphere of fear whipped up by an ugly campaign ‘masterminded’ by the inadequate UK government. However, I cannot stomach a status quo which leaves millions unemployed so failed former national politicians can reprise their inadequacy on a crumbling multinational stage.

This isn’t about Britain, it’s about Europe – Europeans need freedom and freedom to trade. Europe precludes both in its current form – much to the sheer frustration of this European and many more! A vote for Brexit is thus the only vote for an optimistic future. Without that systemic shock now, Europe won’t reform… and there are a limits to how much loadbearing we can anticipate from the duct tape already swaddling the blob.

We need a functional Europe with economic vigour, thus Britain needs to lead the way and endorse Brexit tomorrow.

By means of background, there are now 6 Premium briefs to catch up with on the topic:

Part 1: Brexit – Introduction

Part 2: Brexit 2 EU Dysfunction

Part 3: Spousal Abuse

Part 4: The Vote

Part 5: Brexit 5: Too Close To Call

Part 6: A Vote For Europe’s Future

All are written with an entrepreneurial investors’ eye.

It’s a very busy day in parish news: France’s Secret Seven go Blockchain while ASX is doubling down – already? – on DAH. ICAP offers fascinating resolution and stock tweaks to get deal done and lots lots more, let’s pith:

Public Markets

ICAP Offers To Sell London Oil Desks To Clear Tullett Deal

Noor Zainab Hussain – Reuters

UK’s CMA Considers Undertakings In Broker Merger


ICAP – Statement Regarding Transaction with Tullett Prebon


ICAP and Tullett said on Tuesday that ICAP would no longer retain a 19.9% interest in the combined group after completion of the deal and instead, the shares would be issued directly to ICAP shareholders. They will hold about 56% of the combined group’s share capital after the completion of the deal.

The companies had said earlier that after the deal ICAP would hold 19.9% and its shareholders 36.1% of the new company. Tullett’s existing shareholders will own 44% of the new company.

PLY: Big move – not so much the oil sale but the shareholder shuffle. That may make the separation clearer to some shareholders but it clearly comes at a cost to ICAP. Then again NEX is just so alluring as to be the play of the moment in market structure (in public markets at least).

QV Premium: Exchange Deals Brief – M&As.


ASX Increases Investment in Digital Asset Holdings


ASX is exercising its right to purchase further equity in the US-based firm Digital Asset Holdings, LLC (Digital Asset). ASX is investing US$7,157,065 which increases ASX’s holding in Digital Asset to approximately 8.5%.

ASX will appoint a representative to the board of Digital Asset as it increases its holding.

ASX and Digital Asset have also entered into a commercial agreement appointing Digital Asset as ASX’s preferred partner to continue to develop a distributed ledger technology solution to address the post-trade needs of the Australian cash equities market.

PLY: Can you really double down before the deck has been dealt? ASX seems eager to enjoy some awaydays at board meetings (I am surprised they didn’t already have a board seat locked up…) while DAH gets yet more cash as various competitors already have tangible products out there… These are rather large numbers incidentally for the Australian monopolist to spend compared to its traditional spirit of parsimony. Computershare being on DL manoeuvres of late has clearly, er, unSETL-ed ASX.


Markit to Acquire Prism Valuation


Markit agreed to acquire Prism Valuation a leading provider of independent valuation and risk analysis of derivatives and structured products.

PLY: Not material, no terms disclosed, but closing soon. A neat little nugget to add to Markit Portfolio Valuations in the Valuation and Trading Services segment of Markit’s Information division.


DB1 Establishes A Corporate Venture Capital Platform


PLY: A somewhat woolly press release is at least a bit more comprehensible after reading the fairly boilerplate Celent report and the DB1 ventures site. Both of which reflect the blob fintech status quo.


New CFTC Trading Rule Is ‘Extreme Overkill’

Bart Chilton – CNBC

One would not expect Coca-Cola to divulge their secret recipe for the world-renowned soft drink…nor is it required by government. The same is true for other proprietary trade secrets and intellectual property. That, however, could all change by the end of the year if some at…CFTC … obtain such secret formulas known as “source code” from traders and trading venue operators (exchanges).

PLY: The issue moreover is that no regulator has the budget or the systems to analyse the material… Brutal takedown by the former Commissioner, Bart Chilton.


LCG Shareholders Inject £10m In Proposed Recapitalization


The main elements of the recap will see Charles-Henri Sabet and his partners in the GLIO holding company inject several million pounds into London Capital Group (LCG) to increase the company’s capital base. Sabet and his partners will increase their collective direct interest in LCG from just 20% currently to over 80%, if the transaction is approved by shareholders at the company’s General Shareholder Meeting to be held on July 6.

As at year-end 2015, LCG’s common equity Tier 1 Capital was £8.4 million. After effecting the proposals, this figure will be increased by £4.3 million to £12.7 million. Note that doesn’t include any profits or losses made to date in 2016.

PLY: Not surprising that LCG gets recapitalised but the other shareholders have just suffered significant dilution.


BVB – Sibex Coordination Agreement


QV Premium: BVB – SIBEX Merger Discussions


TMX Signs MoU with Shanghai Clearing House


PLY: Will China’s market infrastructure managers soon suffer writers’ cramp?


HKEX & KRX Sign Non-binding LOI


HKEX and Korea Exchange (KRX) signed a non-binding letter of intent (LOI) to explore the cross-listing of their equity derivatives in each other’s market.

PLY: For those who view MOUs as vapid, the LOI marks a new low I fear.


Project Sentinel: Industry Participants Collaborate On MiFID II Implementation – Initiative By A Group Of Banks Mutualises The Cost Of MiFID II Implementation In The OTC Front Office



EU Swaps Clearing Starts: Five Things You Should Know (subscription)

Tim Cave – Financial News

Rules imposing clearing requirements on Europe’s IRS market took effect on June 21, as the region adopts global reforms already begun in the US and Japan.

Private Markets

IEX CEO Katsuyama Stands Firm On Exchange’s Fee-Only Model


IEX leaves options open for listings and separate data charges but for now IEX is profitable.


At A Meeting Chaired By H.E. Sultan Al Mansoori The UAE’s Securities & Commodities Authority Board Approves Regulations For Central Clearing Houses



Winklevoss Twins Bring Gold-Plated Bitcoin Trading To London

Ian Allison – IBT

Gemini, the cryptocurrency exchange founded and run by Cameron and Tyler Winklevoss, has expanded to the UK, starting off with trading in Bitcoin and ether, the native coin of the Ethereum network.


Singapore Bitcoin Exchange Quoine Raises $20m; Moves to Tokyo


Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL around 1% off.


7 Major Financial Institutions Join Forces To Develop Blockchain Infrastructure For SME Post-Trade


BNP Paribas Securities Services, Caisse des Dépôts, Euroclear, Euronext, S2iEM and Société Générale, in collaboration with Paris EUROPLACE, have signed a MoU to explore together the development of a post-trade blockchain infrastructure for SMEs in Europe.

PLY: This is a fascinating idea and I applaud Paris Europlace for coordinating it but the problem is simply why would any cross border SME want to risk dealing with a ledger based in France which is ‘governed’ by an entirely anti-investment regime where too many citizens harbour an approach to economics which borders on the infantile end of the already bonkers loony left scale? That is all part of the pity of Paris as the institutions involved all have the right intention but who wants to risk their SME being close to the crumbling French polity?


Euroclear Looks To Apply Blockchain To Gold Market (subscription)

Financial Times

…partners with US start-up itBit.


Network Disruption At SIX Resolved


The root cause of the network disruptions since Monday at SIX has been identified and isolated.


Financial Stability Oversight Council Meeting June 21



Regulators Say Bitcoin Poses ‘Financial Stability Risks’ (subscription)

Barney Jopson – Financial Times

Financial Stability Oversight Council raises concern over uncertainties of using digital currencies.


Esma Chief Rejects Yearly Review Of Mifid Bond Rules (subscription)

Tim Cave – Financial News

Career Paths

JPX AGM 2016:  the following 13 directors were elected: Mr. Hiroki Tsuda (Chairman of the Board), Mr. Akira Kiyota (Director & Representative Executive Officer, Group CEO; Chairman Nomination Committee; Member Compensation Committee), Mr. Koichiro Miyahara (Member Nomination, & Compensation Committees), Mr. Hiromi Yamaji, Ms. Christina Ahmadjian (Member Compensation & Audit Committees), Mr. Hitoshi Ogita (Member Nomination Committee), Mr. Hideaki Kubori (Member Nomination Committee), Ms. Main Kohda (Member Audit Committee), Mr. Eizo Kobayashi (Member Compensation Committee), Mr. Masayuki Hirose (Member Audit Committee), Mr. Katsuhiko Honda (Chairman Compensation Committee; Member Nomination Committee), Mr. Kimitaka Mori, and Mr. Tsuyoshi Yoneda (Chairman Audit Committee). With the exception of Mr. Kimitaka Mori, twelve directors assumed their positions. Mr. Kimitaka Mori (Member Audit Committee) will assume his position on July 26, 2016. The following nine directors are outside directors: Mr. Hiroki Tsuda, Ms. Christina Ahmadjian, Mr. Hitoshi Ogita, Mr. Hideaki Kubori, Ms. Main Kohda, Mr. Eizo Kobayashi, Mr. Katsuhiko Honda, Mr. Kimitaka Mori, and Mr. Tsuyoshi Yoneda.

The Exchange Council of European Energy Exchange (EEX) elected Dr. Michael Redanz, CEO of EWE Trading AG, as its new Chairman. He succeeds Peter Heydecker, who resigned from the Exchange Council after the last meeting.

Werner Fleischer, a member of the Management Board of Verbund Trading GmbH, and Kerstin Ludwig, Relationship Manager Prime Solutions & Financing, BNP Paribas, have also been elected as new members of the Exchange Council. Furthermore, Jens Göbel, Head of Power & Emissions Trading, eni Trading & Shipping S.p.A., was elected as an additional Deputy Chairman.

ASX will appoint a representative to the board of Digital Asset as it increases its holding.

ESMA Calls For Economic Advisors To Join Stakeholder Panel


Financial Calendar

22.06 – BGC Partners AGM 2016

22.06 – WSE AGM

24.06 – Nasdaq $0.32 quarterly dividend payment

New! 28.07 – Thomson Reuters Q2 2016 Results – press release

New! 29.07 – CBOE Q2 2016 Results – press release

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

Other stories

ESMA: Steven Maijoor Speaks At European Parliament On MiFID II



Statement Of CFTC Chairman Timothy Massad On The Financial Stability Oversight Council’s Adoption Of Its Annual Report



Remarks At The ISDA Annual Legal Forum In NY, Gary Barnett, SEC Deputy Director, Division Of Trading & Markets, June 16, 2016



Autorité Des Marchés Financiers Launches Whistleblower Program



Financial Stability Oversight Council Releases Sixth Annual Report



Hong Kong’s SFC Publishes Annual Report 2015-16



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