March 04 2016

elb2Issue 702, in the continuing series of Exchange insights… Today, in our Premium service, I am delighted to offer a modest scoop to end the week – we have finally unearthed some of the core data around the DB1- LSE merger  World Exclusive OTC Versus ETD Clearing Clarification.

I bet they’ll be discussing little else at the Boca poolside for those (lucky?) souls whose expenses exceed broad measures of common sense / return on capital.

If you want to pool your ignorance on the merger mania, don’t look here as again I have pruned the more dismal end of the mass media spectrum’s jaded discussions and outmoded insights (again stay ahead: read EI Premium, it’s only a short  – but highly cost effective – $300 step from Ignorance to Individual Insight).

There is lots happening the world over so let’s get scrolling:

Public Markets

LSEG Prelim Results For The Period Ending 31 December 2015


vs 2014: total income up 72% to £2.38 bln (USD 3.35 bln), total revenue up 78% to £2.28 bln (USD 3.21 bln), total adjusted operating profit up 27% at £709.6 mln (USD 1.00 bln), adjusted profit before tax up 31% at £643.4 mln (USD 907 bln).

PLY: These profits would appeal a great deal more if there were accounts in plain English and not this cross-fetishising BDSM accountant-speak which reveals a dollop of cash here and a dollop there, with that uneasy feeling we know where those who used to write CDS-squared prospectuses got to after their mention in “The Big Short.” To the casual reader the abject complexity could scream ponzi – of course any casual reader in these LSE accounts, by definition, needs their head examined. Old fashioned virtues like the exchange leading by example might be worth considering here – and I don’t mean the accounts aren’t compliant – clearly they must be…but gibberish dressed as lamb isn’t useful for transparent markets. Maybe we can have an “Open Access” to the company figures campaign? There has been conspicuously worse agitprop on the go in recent times.

Credit Suisse: Don’t Rule Nasdaq Out Of LSE Battle (subscription)

Tim Cave & James Rundle – Financial News

PLY: Absolutely not – and the amusing thing is that Xavier’s defenestration removes a personal enmity to negotiations which could actually entice NASDAQ and besides honest Bob’s empire is not likely to arouse so many CCP issues.

QV Premium: DB1 – LSE Merger Brief.


Open Letter To BM&FBOVESPA’s Shareholders


PLY: Discussing Cetip bids.


SEC: Contentious U.S. Stock Exchange Pricing On Regulatory Agenda

John McCrank – Reuters

A subcommittee of the SEC’s Equity Market Structure Advisory Committee will make a recommendation at its next meeting in late April on whether the regulator should test eliminating the “maker-taker” model for some stocks, Stephen Luparello, director of the SEC’s Division of Trading and Markets told a U.S. Senate committee.

Stephen Luparello, Director, SEC Trading & Markets Division – Before US Senate Committee On Banking, Housing, & Urban Affairs Subcommittee On Securities, Insurance, & Investment, March 3, 2016


PLY: As we hope to rid ourselves of the horrible vestiges of “last look” in forex, will there be a marked demise in “maker taker”? – pricing borne of a more noble idea but one which I am not convinced has ultimately served the market so well as I first hoped.


T+2 Settlement Begins in Australia on Monday 7 March 2016


PLY: Which you could say leaves the Oz market only 170,000 or so seconds short of Blockchain settlement but of course nobody knows this better than Elmer. Which reminds me, don’t forget to download the “Towards A Real-Time World Market” white paper – it’s more free stuff from my keyboard: Download here.


Esma Sounds Positive Note On Clearing House Safety (subscription)

James Rundle – Financial News

Esma said that rules governing how clearing houses interact with each other are generally working well, but warned that the re-use of collateral may increase systemic risk if not managed correctly.

PLY: Encouraging…but a bit like asking an age-obsessed person when they start 50-therapy a few years post their months of expensive 40-therapy, let’s ask ESMA how safe that world looks if Homer Simpson & Friends has fewer major CCPs to access as a result of a DB1-LSE or similar deal?

Private Markets

Regulator Warns DSE On Breach Of Rules

Daily Star

Dhaka SE has failed to properly comply with demutualisation scheme and rules, says the regulator.


National Online Trading In Agri Commodities To Begin From April

Business Standard

The proposed National Agriculture Market is to come about by electronically linking 585 major wholesale markets (mandis) in the country, termed Agricultural Produce Market Committees.

PLY: A great idea, I hope it works and indeed a lot better for producers and all parties than the NSEL which remains a festering pit of unresolved skulldgugery and stupidity.


Botswana SE Hikes CSD Fees Two Fold


Dividend News

LSEG proposed final dividend 25.2p – an implied 20% increase in the full year dividend to 36.0p per share.

MOEX recommended a dividend for 2015 of RUB 7.11, total recommended dividend is RUB 16.2 bln, or 58.2% of the company’s IFRS net profit for 2015. The proposed dividend record date is 16 May 2016, expected to be paid no later than 20 June 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 3% as FTIL is up nearly 2%.


Sebi Upgrading Surveillance For Commodity Exchanges

Rajesh Bhayani – Business Standard

Sebi is integrating its online surveillance system,while NCDEX has assigned two tier investigations in the castor episode.

PLY: Seriously, Sebi have online systems? Do they run via Netscape?


Thomson Reuters Partners with FinTech SuperCharger Accelerator in Hong Kong

Thomson Reuters

PLY: Interesting deal.


Iceland’s Genesis Launches First Bitcoin Mining Fund


Genesis Mining, which provides computer equipment to create bitcoins in the cloud, on Thursday launched the world’s first fund that invests in hardware used to create the digital currency.

PLY: Bitcoin mining, that all sounds so 2012 nowadays, surely? Isn’t the heat elsewhere like Ethereum and besides the margins appeared to me to have been squeezed out of this process – albeit presumably this has a backbone of cheap data centre power from the amazing Icelandic hydroelectric industry…


HKEx Revamps Gold Futures Targeting China’s Wealth

Eduard Gismatullin – Bloomberg

New Yuan & USD physical delivery contracts (previous contract, begun 2008, cash-settled & quoted only in U.S. dollars – which was suspended after gold pricing was transferred to an electronic auction on March 15 from a century-old procedure).


ISDA Publishes Australian Clearing Classification Letter



Philippine SE Eyes New Rules on Dollar-Denominated Securities (subscription)

Cris Larano – Wall Street Journal

Current rules were approved in 2003.


Bloomberg Tradebook Shines Light on Dark

Markets Media

Bloomberg Tradebook plans to add greater dark-liquidity insight to its Strategy Analyzer’s In-Trade tool by mid-year.

Career Paths

MOEX Board approved the following list of candidates nominated by shareholders for MOEX’s 12-member Supervisory Board to be elected at the AGM:


Alexander Afanasiev, CEO, Executive Board Chairman, MOEX.

Mikhail Bratanov, Head of Societe Generale Securities Services in Russia & CIS, Head of Securities Services Department, ROSBANK, independent candidate.

Yury Denisov, Deputy Chairman of Supervisory Board, NCC Clearing Bank, non-executive candidate.

Sean Glodek, Deputy General Director, member of the Management Board of Russian Direct Investment Fund, non-executive candidate.

Andrey Golikov, Deputy Chairman of Supervisory Board, MOEX, non-executive candidate.

Valery Goreglyad, Chief Auditor, Bank of Russia, non-executive candidate.

Anatoly Karachinsky, President, IBS Group, independent candidate.

Alexey Kudrin, Chairman of the Supervisory Board, MOEX, non-executive candidate.

Duncan Paterson, independent candidate.

Reiner Riess, Director General, FESE AISBL, independent candidate.

Yuan Wang, independent candidate.

Bella Zlatkis, Deputy Chairman of the Management Board, Sberbank, non-executive candidate.

Mariya Gordon, member of the Supervisory Board, ALROSA, independent candidate.

Oleg Zhelezko, member of BoD, Investment Company IT Invest, non-executive candidate.


It also approved the list of candidates nominated by shareholders to the Revision Commission:

Vladislav Zimin, Advisor, Bank of Russia.

Mikhail Kireev, Senior Expert of Investment Department, RDIF.

Olga Romantsova, Head of Financial Market Operations Audit, Sberbank.


The Board amended the Exchange Council Provisions and endorsed Arsen Aivasov, General Director, Finam, to be a member of the Exchange Council. Arsen Aivasov will replace Sergey Lukyanov, also from Finam.

The new members of the Exchange several user committees were appointed.

The Board terminated the authority of Andrey Shemetov, Deputy Chairman of the Executive Board of MOEX, with effect from 9 March 2016.

PLY: As noted at the time of the MOEX slate being announced, Niki Beattie resigned as an MOEX NED (broadly representing the interests of EBRD which presumably is now filled by Duncan Paterson).


Denis Kessler, Chairman & CEO of SCOR, was appointed member of the International Advisory Panel (IAP) of Monetary Authority of Singapore (MAS) for a period of two years.


Ahmad Fairuz Zainol Abidin was appointed Securities Commission Malaysia (SC)‘s new Deputy Chief Executive (DCE) which takes effect from 1 April 2016.


CFTC, SEC Inch Closer To Full Strength With Nominations Moves (subscription)

Andrew Ackerman – Wall Street Journal

Law professor Chris Brummer and ex-House aide Brian Quintenz tapped for CFTC, while two SEC nominees to get hearings as early as this month.


ESMA Announces Vacancy For A Policy Officer In The Corporate Reporting Team


The deadline for applications is 4 April 2016.

Financial Calendar

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! 27.04 – MOEX AGM – press release

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

Other stories

HK’s SFC Stresses Accurate, Clear And Balanced Disclosure Of Inside Information – Cooperation Will Bring Tier 1 Clearing Solution To A Wider Audience


Richard G. Ketchum, Chairman And CEO, FINRA: Testimony Before The Subcommittee On Securities, Insurance And Investment, United States Senate


Canadian Securities Regulators Release IIROC Oversight Review Report



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