JUNE 26 2017

Good morning and welcome to Exchange Invest Issue 1023…which I could use as a platform to discuss Ford GT40 chassis number 1023 but I fear few bar a handful of you might follow the work of Alan Mann, Ronnie Spain and the, er, occasionally perverse, creativity of Franco Sbarro.

So here’s a factoid instead: 1023 hours is 42 days and 15 hours.

Euro Clearing Essentials

1) 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.

2) PLY CapX explainer The EU’s Euro Clearing Plan Is An Act Of Protectionist Self-Harm.

In Today’s Exchange Invest

Big fines for Chinese HFT firm, China A shares in MSCI a “non-event” as GEM looks rough and uncut while HKEX’s CEO Charles Li looks on top of the world are some of the leading stories in a fascinating day where Bart Chilton is worried about regulatory burnout.

And there’s more, especially Product News, happy scrolling:

In BigWorld

The parish reacted to news of the demise of Travis Kalanick as CEO of Uber with understandable

Out there in BigWorld parishioners were keen in conversation to echo the words of Tech Target (“Uber CEO’s Exit Puts Spotlight On Importance Of Company Culture”):

“Culture matters and that was the take-home message for companies — behemoths and fledglings alike — when the co-founder and CEO of Uber, Travis Kalanick, resigned under shareholder pressure earlier this week.”

Then again taking a step back I am minded to wonder if there isn’t a danger of one of those multilateral eye camel needle threading repo trades to worry ourselves about here. We enter summer after all with one major exchange CEO apparently working unperturbed despite being under investigation for insider dealing and that is picking but one example of curious ‘stuff’ in the parish. Errors are human, indiscretions inadvisable but often rectifiable. However there do appear to be a few smoking Lugers (if not Winchesters, Purdeys, Berettas, Nidars et al) in the parish and I am minded to wonder just whether we’re really such a paragon of virtue as some diocesan ‘leaders’ are eager to proclaim.

Public Markets

Hong Kong’s Mr. Market Wants A Piece Of All Your China Trades

In a 20th anniversary of the handover of HK from Britain back to China, Charles Li delivers a triumphant and fascinating interview. The various collywobbles of the past appear to be fully over and he is entirely in charge of HKEx as it powers forward across a network of through trains looking to primary equity and debt markets next.

Intercontinental Exchange Executives to Testify Before Congress on Central Clearing and Equity Market Structure

PLY: Scott Hill and Tom Farley headed to the Hill.

Carsten Kengeter’s Bashful Bash
Financial Times

PLY: Michael Spencer named amongst the guests at Carsten Kengeter’s belated birthday party (the wheels falling off “MOED” rather muted celebrations previously).

UK Fraud Agency Closes Probe Into Bank Of England Liquidity Auctions

PLY: No evidence of criminality. The end.

Exclusive-Report Says EU Firms Face Higher Banking Bills After Brexit

PLY” It’s always the footnotes that get you in the end. Whereas Britain is in meltdown because the EU is playing huffy politics over migrants, the truth below the Presidential hot air is that there are a lot of bodies in Europe, who like their UK counterparts see a vast void in trade if they cannot export eg. the one in 12 German made cars which Brits eagerly buy annually. Then there’s banking – surprisingly it seems the cost of finance could shoot through the roof if the EU doesn’t mutually recognise the UK’s financial centre.

ECB In Drive To Control Post-Brexit Euro Clearing
Financial Times

PLY: I was left wondering Friday evening if I had perhaps been reading the wrong web site…for the ECB’s moves strike me as an understandable desire for oversight via information sharing as opposed to the forced repatriation desired by the pure play protectionists. There is much negotiation to be had and indeed internally the cat fight between ESMA and ECB could yet prove popcorn-worthy. However, despite the desire of the abjectly dire legacy remoaners like the Brussels Bugle (amongst many other guilty parties) to project an air of crisis to the detriment of Britain (and indeed Europe, including the EU itself).

Future Still In Doubt For Hong Kong’s ‘Quirky’ Small-Cap Exchange, The GEM
South China Morning Post

PLY: After 18 years, the SCMP looks back on the history of the HKEX SME market, GEM, which may best be described by the phrases “rough and uncut” in diamond parlance.

London Stock Exchange Group Plc Transaction In Own Shares

PLY: As LSE buys and buys and buys, Milan boss Rafaele Jeruselmi amongst those selling recently…

Mandatory Notification Of Trades – Oslo Børs VPS Holding ASA

High-Speed Trader To Pay $101 Million In Landmark China Case
Salt Lake Tribune

PLY: Bet you have never heard of Yishidun International Trading (apparently controlled by 2 Russians) which was fined 300 million yuan ($44 million) for manipulating China’s futures markets and ordered to disgorge 389 million yuan in profits. As well as the suspended sentences, two of its executives were fined a total of 1.8 million yuan. The article is worth reading…

Congress Is Basically Launching A ‘Flamethrower’ At Financial Regulations

PLY: Bart Chilton sees red at plans to immolate a lot of his CFTC legacy. I would welcome a flamethrower being aimed at regulation (MIFID II makes perfect kindling for this combustible approach methinks) albeit I do see some problems in the “too big to fail” arena amidst what is a regulatory fixation with bank-centricity. On which note while Bart is asking regulators to look to future risks he is right BUT he is also only looking at the single dimension of a world where banks would be a lot less important a lot faster if only they were not actually supported by so many regulations perverting their monopoly against the best interests of business and consumers alike…

Why China’s MSCI Breakthrough Is The Most Important Non-Event Of The Year
South China Morning Post

PLY: Useful breakdown of the numbers by Tom Holland.

Private Markets

PSX To Be Listed As Company On PSX
The Express Tribune

PLY: Pakistan Stock Exchange listing after Eid…

Pakistan Regulator Notifies Rules For Futures Exchanges

PLY: Capital of up to 10 million US (or what sounds like an eye popping 1 billion local Rupees).

NSE Co-Location Case: Sebi Wants Unlawful Gains Quantified
Daily News & Analysis

Fired Stock Exchange Staff To Pm: We’Re Broke, Allow Us To Die
The Quint

PLY: A sad tale from Kanpur SE, Uttar Pradesh, India.

Special Section: FTI, NSEL, India at the Crossroads

Bombay HC Asks Judge Hearing NSEL Case To Step Down
Mumbai Mirror

Judge Ajay Dinode, who hails from Buldhana, was on probation for the past two years and the administrative committee of the judges of the Bombay High Court took the decision to discontinue his services.

PLY The GUBU tale of NSEL just took another step backwards it seems.


OCC’s Fintech Charter Plan Draws Debate

PLY: The bank versus fintech divide remains a vast chasm and the problem is how much confidence can we have that the Office for the Comptroller of the Currency really knows what is going on, given that the precepts of this movement have been in the public domain for over 20 years but they have come as a shock to the blob who only discerned them in recent years?


HKEX To Introduce CNH- And US$-Traded Gold Futures On 10 July

CFTC Acting Chairman Giancarlo Applauds ARRC’s Decision On New Reference Rate

Tradeweb Markets To Provide The First Offshore Electronic Bond Trading Platform Connected to CFETS For Bond Connect
PR Newswire (press release)

London Fund Managers Soften On Saudi Aramco Float Ahead Of New FCA Rules
City A.M.

A Better Cheddar Benchmark? A Daily Cheese Auction Is Going Electronic
Fox Business

Ukrainian Stock Exchange To Start Trading Deliverable Futures On Grains

In Response To CalPERS Lawsuit, IAC Abandons Plan To Issue Non-Voting Stock

Career Paths

Three Winners Named In EGX Board Elections
Mubasher Info

Why I Am Backing Tony Falkenstein For The NZX Board – By Brent King

PLY: An interesting cri de coeur ahead of the NZX AGM Friday.

Outgoing Finance Secretary Chan Ka-Keung Supports Start-Ups Board And Future Fintech Innovators
South China Morning Post

PLY: After a 10 year cabinet spell, outgoing Secretary for Financial Services and the Treasury Chan Ka-Keung endorses the HKEX plan for an SME board while announcing that he intends to return to academia to study fintech.


The Far Right Uses This Site To Fund Its Favorite Causes—And Its Founder Hopes To Build A ‘Very …

PLY: The price of using this, ahem, very niche platform is 15% compared to around 5 plus bank fees for most crowdfunding platforms…

Other Stories

FCA’s BMR Consultation Answers Many Questions, But More Remains To Be Done By All Involved

PLY: Good to see Tobias Sproehnle, mentioned in despatches.

When Bombay Overtook Calcutta : A History Of India’s Financial Geography

Financial Choice Act Is A Blatant Attack On Shareholder Rights
Financial Times

How Trump’s Financial Cop On The Block Should Prioritize The Job
The Hill (blog)

Central Clearing And Liquidity, Federal Reserve Governor Jerome H. Powell At The Federal Reserve Bank Of Chicago Symposium On Central Clearing, Chicago, Illinois
Meanwhile, it’s a whole new week which culminates in July – woo hoo!


Patrick L Young
Executive Director DV Advisors

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