March 02 2016

elb2700 Issues of Exchange Invest today – why not celebrate with a Premium subscription? Sign up today: Only $300 separates ignorance from (individual) insight. (Email for payment options).

To celebrate another mini-milestone, I have been piling on the Premium insights, discussing that matter of moment, the threesome which may run as long as a Brazilian soap opera (expect new characters in the plot too). For some, yesterday felt As Time Stands Still while I have pondered the sagacity of the newly centralised management structure of one entity (deploy your intuition to guess which:) If This Is Learning Perhaps DB1 Should Attempt Ignorance? (As always anybody breaking our individual licence will pay 100,000 GBP & be publicly named – so even a corporate sub is small beer by comparison… sign up today, please).

Previous missives in the DB1-ICE-LSE 50 shades of merger masochism tale can be found in “Be Careful What You Wish For”, A Simple Numerical Progression & Xavier: Where Did It All Go Wrong? …& yes I am only warming up to the topic. So much to discuss.

In Bigworld, I see Brian France, the boss of NASCAR has backed Donald Trump for President – how can he lose now? One more vroom & it’s 1600 Pennsylvania Avenue (thus soon we’ll know how many holes you can fit into a round of the White House gardens too, presumably).

Public Markets

HKEx 2015 Results

HKEx

vs 2014: revenue HKD 13,37 bln ($1.72 bln), up 36%, EBITDA HKD 10 bln ($ 1.28 bln), up 46%.

Shanghai-Hong Kong Stock Connect generated revenue of HKD200 mln ($25.7 mln) in 2015, up 194%.

PLY: Read this & weep all those cynics who persisted in their dumb anti-through train myopia… Great HKEx results. Now HKEx just have to make sure they can solve the LME warehouse issues without overly upsetting their own percentage take…

LME Revenue From Trading Fees, Tariffs Surges 51% in 2015

Reuters

PLY: Volumes dip 4% but commercialisation strategy works for the bottom line.

 

ICE To Acquire S&P’s Securities Evaluations, Inc. & Credit Market Analysis from McGraw Hill Financial

ICE

PLY: No terms disclosed other than it might be cash, might be stock & is subject to regulatory approvals. ICE buys a handy analytics toolkit which dovetails neatly with IDC (S&P’s Securities Evaluations, Inc. (SPSE), & Credit Market Analysis (CMA). What ought to worry everybody else is that ICE are going to continue to do such deals while most others further down the pyramid are paralysed with just one (putative) transaction at a time.

QV Premium: Exchange Deals Brief & Index Companies Deals Brief.

ICE Statement On Possible Offer For LSEG

ICE

PLY: Essentially until 1700 GMT March 29th 2016, DB1 is just in a state of blind panic. After that ICE needs to bid to keep the chaos going by bidding.

Oh and of course now CME will probably feel duty bound to enter the fray…

ICE: Rule 2.10 Announcement

ICE

PLY: ICE has 118,998,178 shares as of February 29th, just to show the good folks in Atlanta are on top of their paperwork and to further place the men without a backup plan in Frankfurt further on the defensive, again without saying anything much.

Never Mind the Bids – Is the CCP Safe?

Ben Wright – Daily Telegraph

PLY: Amongst many words, few insights in most media, alas (I am compressing the daily digest for speed of elucidation by eliminating ‘obvious’ stories not advancing the narrative). However, financial generalist Ben Wright nails a key issue with this excellent article.

LSE, DB1 Do ‘Street Sweep’ To Hinder Rivals

Matthew Monks & Aaron Kirchfeld – Bloomberg

LSEG & DB1 have gone on a hiring spree for banks in a so-called street sweep, as they try to fend off interlopers to their European exchange merger by hoarding advisers and financing.

PLY: #Pathetic. Again the short-termism of the investment bankers running LSE & DB1 runs entirely contrary to any shareholder value arguments (then again when you strip out the likely antitrust defenestration, there arguably isn’t much coherent value add to DB1-LSE). All grist to the mill but a damning indictment of where IBs are going wrong – bring on the revolution. Exchanges ought to show best in class practice in corporate governance whereas DB1 & LSE are in danger of looking more like they are managing old line energy explorers in decades gone by…

Set AIM Free From A LSE Deal

Anthony Hilton – Evening Standard

PLY: I have a lot of respect for Anthony and fully appreciate whence comes his argument. However, I think he is missing the minutiae e.g. increasing competition from ISDX. Hence his principled but incorrect line of argument. If LSE want to strangle AIM, let them keep doing so – for some years they have been effectively (alas!) constraining what was once a rather nimble, neat, focussed plan of simplicity created by Simon Brickles.

 

ICAP – Publication of Circular & Notice of Meetings

ICAP

Tullett Prebon’s Deal With ICAP on Track to Finish by September

John Detrixhe – Bloomberg

Tullett Prebon, which is buying rival ICAP’s voice-broking division, said the transaction is on pace to conclude by September as it prepares for a shareholder vote.

A prospectus will likely be sent to shareholders of both companies on March 2 and a vote on the transaction held March 24. While the completion of the deal depends on competition authorities and regulators, finishing the transaction in Q3 is a good estimate, according to Tullett CEO John Phizackerley.

PLY: #Exciting. As the parish fixates on value avoiding merger of DB1-LSE, they ought to focus on the smart money mover, Michael Spencer. Seismic stuff is happening at ICAP.

 

MCX Joint MD Seeks Clarification On Raising Foreign Shareholder Cap In Stock Exchanges

Ram Sahgal – The Economic Times

Hailing the government’s proposal to raise the single foreign shareholder cap to 15% from 5% in stock exchanges, MCX Joint MD PK Singhal said that the finance ministry should clarify whether this applies to clearing corporations as well.

 

Whistleblower Award For NYSE Fine Goes To HFT Critic

Francine McKenna – MarketWatch

Eric Hunsader, a vocal critic of high-frequency traders, said SEC is sending him a $750,000 whistleblower award.

PLY: What a welcome recipient! Mr Hunsader deserves this reward & recognition of his work in traducing the dark arts of the wrong end of the HFT equation.

 

LME Prepares To Enter The Heart Of Warehousing Darkness

Andy Home – Reuters

PLY: Interesting read, clearly a tricky spot for LME all along, especially as they get a bit of the fees of course. Goose defeathering without hurting the egg-layer is invariably a tricky activity.

 

Stock Exchange Prices Grow So Convoluted Even Traders Are Confused, Study Finds

Nathaniel Popper – NY Times

Computer-driven American stock markets have become so complex that at any moment in time more than 800 different pricing possibilities are being offered to trading firms across 12 official exchanges, according to new research attempting to explain the tangled system.

Royal Bank of Canada report will be released to clients this week in advance of a Senate hearing on Thursday that will examine how the structure became so convoluted and what might be done to improve it.

PLY: Interesting reading coming soon, clearly. Of course RBC used to employ a very intelligent go ahead young man by the name of Brad Katsuyama, along with forward looking luminaries like Ronan Ryan, Rob Park & John Schwall. No prizes for guessing where they are now shaping the future of markets…

 

ESMA Issues Report On Risks & Costs Of CCP Interoperability

MondoVisione

Private Markets

Vietnam’s Two Top Bourses See CEO Reshuffle, Merger May Be On Cards Soon

Nguyen Thi Bich Ngoc – Deal Street Asia

Hanoi SE Chairman & CEO Tran Van Dung has been named CEO & Deputy Chairman of Ho Chi Minh City SE following the resignation of Phan Thi Tuong Tam, suggesting a cross town merger is looming.

PLY: Vietnamese stock traders ought to recall my words from 20 years ago when cross town mergers were first in vogue: “Marrying your cousins does not necessarily improve the quality of the gene pool.”

Dividend News

HKEx Board recommends a final dividend of $2.87 per share, resulting in the full-year dividend of $5.95 per share, an increase of 49% as compared with that for 2014.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 1%, FTIL up 2%, India digesting the budget – it didn’t help NSEL get resolved but was broadly good for markets.

EOW Arrests Another NSEL Defaulter

Business Standard

The Economic Offences Wing (EOW) of the Mumbai Police has arrested Ramesh Nagpal, Proprietor of Shree Radhey Trading.

Technology

Making Sense Of The Finance Industry’s Blockchain Projects (subscription)

Anna Irrera – Financial News

It might seem crazy to think that the first applications based on blockchain might come into use in the capital markets in 2016. After all, it is not long since some financial institutions could barely bring themselves to mention the technology.

PLY: Financial market middle management are so process driven as to be frequently blind to change until the bandwagon gets rolling. Now they all reckon there is a promotion in Blockchain so they will ride it until they find something else to advance their careers (perhaps leaving Blockchain in limbo).

Incidentally ICDA are working to deliver an adult Blockchain discussion at their event April 19-20 in London. I look forward to it.

 

Hong Kong’s SFC Concludes Consultation On Changes To ATS Guidelines

MondoVisione

Hong Kong’s SFC Establishes Fintech Contact Point

MondoVisione

Products

Nasdaq To Expand Trade In European Power, Gas Derivatives

Reuters

Nasdaq Commodities will expand trade in European energy derivatives, including UK gas & French power. The new offerings will include Belgian, Spanish and Italian power contracts, in addition to existing trade in German, UK and Dutch derivatives. In gas, products will include Dutch TTF, German NCG, German Gaspool, UK NBP, French Peg Nord, French TRS and Belgian ZEE contracts.

PLY: QV With yesterday’s talk about UK investigations into a possible reduction in competition due to the ICE acquisition of Trayport – I didn’t even mention NASDAQ’s endeavours in the field which further convinces me there is not an issue here for ICE-Trayport.

 

Financial Stability: New EU Rules On Central Clearing For Certain Credit Derivative Contracts

MondoVisione

 

CBOE To Offer FLEX Index Options With Asian & Cliquet Style Settlement

PRNewswire

…beginning Monday, March 21.

 

PK Singhal: MCX Is Ready For Options

The Economic Times

 

ISE Mercury Completes Initial Rollout Schedule – More Than 600 Of The Most Actively-Traded Options Products Available For Trading

MondoVisione

PLY: Another day, another casual demonstration of habitual rollout excellence from the ISE team.

 

Clearing For UK, Dutch & Belgian Power Spot Markets To Be Migrated To ECC On 31 March 2016 – One Central Clearing For All Central Western Europe & UK Power Spot Markets

MondoVisione

Indexes

MOEX To Be Included To MOEX Blue Chip Index

Reuters

Career Paths

ICE announced COO appointments at ICE Futures U.S. and ICE Clear U.S.

David Farrell, Senior Director, Global Soft Commodity Operations, has been promoted to COO of ICE Futures U.S. Farrell joined ICE in 2012 and has held leadership roles in market supervision, product management, commodity operations and, most recently, head of global soft commodity operations across ICE Futures U.S. and ICE Futures Europe.

Hester Serafini joins ICE as COO of ICE Clear U.S. In this role, she reports to Tom Hammond, President of ICE Clear U.S., and is responsible for managing the clearing house operations and interpreting and implementing regulatory changes. Serafini joins the company from J.P. Morgan, where she led the OTC clearing and intermediation business for credit, FX and rates derivatives in EMEA.

FOW reports that CME appointed SGX‘s former legal head Eli Cohen as its Singapore-based general counsel.

Deal Street Asia reports that Hanoi SE Chairman & CEO Tran Van Dung has been named CEO & Deputy Chairman of Ho Chi Minh City SE following the resignation of Phan Thi Tuong Tam.

FN reports that Sallie Krawcheck, whose senior roles at Citigroup included running the brokerage and research unit, chief financial officer and wealth management head, has joined the board of Digital Asset Holdings, the blockchain startup led by the former JP Morgan commodities chief Blythe Masters.

PLY: The board of DAH could yet rival the CME in size at this rate…

The International Securities Exchange (ISE) announced that its CTO Robert Cornish will assume the position of CIO upon the retirement of current CIO Daniel Friel, effective April 1, 2016. Thomas Reina, currently in the position of SVP, Technology Development, will become CTO.

PLY: Congratulations to  Messr Cornish & Reina on deserved elevations but most of all a huge word of thanks & compliments to retiring CTO Daniel Friel who was with ISE as a consultant when the dream looked somewhat outrageously ambitious. In practice, he has delivered an incredible stability in technology (across first NASDAQ then DB1 software) against a background of explosive growth & elegantly nurtured his successors too. ISE were the first revolutionaries blazing a trail across the legacy mess masquerading as US options market infrastructures, then still rooted in Dickensian analogue practices. Mr Friel deserves profound acknowledgement for his revolutionary achievements.

Abdullah Harmoozi, who has been with HSBC for five years looking at various roles within the wealth management and global markets space, has taken on the position of Business Development for the MENA region for DGCX.

Axioma appointed Joel Coverdale as the Head of Asia ex-Japan. He will be based in Hong Kong.

Financial Calendar

02.03 – Record date BGC Partners $0.14 dividend

02.03 – ICAP – TNT – prospectus will likely be sent to shareholders of both companies

04.03 – LSEG prelim results for the period ending 31 December 2015

04.03 – Record date CBOE $0.23 dividend

04.03 – Record date ITG $0.07 quarterly dividend

22.03 – Deadline for DB1 to bid for LSE

24.03 – ICAP – TNT – vote on transaction

29.03 – Deadline for ICE to bid for LSE

New! 13.05 – ICE 2016 AGM – press release

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

Other stories

Iran-Turkey Capital Market Agreement

MondoVisione

 

FESE – De La Vega Prize 2016: Competition Is Open!

MondoVisione

PLY: Including even Blockchain in 2016…

 

FIA SEF Tracker January 2016

MondoVisione

 

 

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