March 11 2016

elb2Calm before the weekend and the possible blizzard of deal news with DB1’s much trailed “merger of equal desperation” acquisition bid for LSE apparently due to emerge next week. Anticipate many delegates utterly appalled they may have to stay sober at Boca Raton – at least until about lunchtime.

Until then baton down and watch a few old episodes of “Das Boot” to get into the feel for how it is in the pressurised deal chamber where you hope to make a bid but know that out there at least one vast multipurpose predator is on the High Seas chasing you down in your underwater bunker…

Have a great weekend, will update more on deal thoughts as I see it in Premium…

Public Markets

Leucadia Extends FXCM Credit Deal, Adding Time for Asset Sales

Emma Orr – Bloomberg

Leucadia agreed to extend its credit pact with FXCM by one year, to January 2018, to give the business more time to exit some holdings.

QV Premium: FXCM Stakes Sales Brief.

PLY: Original FXCM shareholders surely always knew they had an optionality issue over an extraneous event crushing the business, they probably just didn’t finger the SNB as the likely catalyst.


Trust LSE Shareholders To Make Right Decision Over DB1 Bid

City A.M.

PLY: Yes but antitrust has a sound role to play – the last thing we need is systematic danger amidst investment banker eagerness to get the deal done.

QV Premium: DB1-LSE Merger Brief.


DB1’s Nasdaq Deal

Gilbert Kreijger – Handelsblatt

DB1 has agreed to sell ISE for $1.1 billion to Nasdaq…

PLY: ..and now it has some cash to offer LSE shareholders when Jeff Sprecher reprises his “Robin Hood for shareholders” approach which worked for CBOT investors.

Nasdaq Shares Fall After Deal To Buy ISE (subscription)

Nicole Bullock – Financial Times

Investors greeted Nasdaq’s deal to buy DB1’s ISE, with some scepticism on Thursday, sending Nasdaq’s shares down as much as 3.5%.

Nasdaq Just Took a Step Toward Challenging the Flash Boys Bourse

Annie Massa – Bloomberg

PLY: From the call yesterday Bob Greifeld “looking to put those licenses to use “within a reasonable period of time,”” with “one avenue under consideration is a so-called speed bump to slow orders to buy and sell shares,” Bloomberg notes.

The IR call yesterday was pretty standard fare. I note analyst Rich Repetto always seems to ask the first question (does he call in like an hour before and hit the ‘get in the queue button?’ Or is there a low latency mechanism to move faster up the queue for conference calls devised by Citadel or somebody?) Anyway the one glaring omission in the NASDAQ call was that the ISE management was not really talked about yet that is perhaps the most strategic benefit to this acquisition in terms of the sorts of skills NASDAQ desperately needs at the top of its operations. The synergy targets will clearly be met as t’s $40 million dollars and pertains to software homogenisation as ISE prepares to go back to OMX technology.


Why Citadel Opposes IEX’s SE Application

Francine McKenna – MarketWatch

Citadel still says SEC should reject IEX’s application to be an exchange even after the firm revised its application to placate critics.

PLY: This is the delicate version suitable for public consumption. A beverage in a London or new York hostelry with an informed but not directly interested party often suggests a slightly more blunt view apparently.


MOEX Sold Its Remaining Stake In Ukrainian Exchange


MOEX completed its exit from Ukrainian Exchange by selling its remaining 23.09% stake in the company, as discussed yesterday. In February, MOEX sold 19.9% of Ukrainian Exchange.


Eurozone FTT Plan Stalls, Says Minister (subscription)

Matthew Dalton – Wall Street Journal

A plan by eurozone countries to tax financial transactions has stalled amid concerns about details of the proposal and political uncertainty in several nations of the currency bloc, French Finance Minister Michel Sapin said Thursday. QV Premium: EU FTT Brief Part 2.

PLY: Beware this tool of the devil will re-emerge until it has a stake through its heart.


NZX Update On NZClear Process


NZ Central Bank Decides To Keep Settlement System, Rejects NZX Bid


The Reserve Bank of New Zealand (RBNZ) has decided not to sell its clearing & settlement system NZClear, meaning New Zealand financial markets will keep two separate settlement systems. The RBNZ had sought bids for NZClear after a strategic review in 2014, but said in a statement on Friday that there were no bids that met its requirements.

NZX, which operates a competing settlement system, had made a bid for NZClear.

PLY: Interesting. Will need to think about this one.


ABN AMRO Clearing To Consolidate UK Equity Clearing With EuroCCP


HFTs Set To Benefit From ABN Clearing Move (subscription)

Tim Cave – Financial News

ABN AMRO Clearing Bank  will consolidate the clearing of its UK equity trading with EuroCCP as of today to maximise cross-platform netting.


Chi-X Says ASX Can Cut Clearing Fees By At Least 23%

Shaun Drummond – SMH

ASX’s share trading competitor Chi-X Australia says the dominant exchange should be cutting its clearing fees by at least a quarter with the advent of a two-day settlement limit this week.

But ASX has hit back, pointing out its clients’ margin requirements have already been cut by a third, or roughly $100 million, since so called T+2 trading was introduced on Monday. Prior to this trades had to be settled within three days.

PLY: At least in a volatile uncertain world one can always rely on EFK to spout dubious remarks which often strike some as inferring he is on the precipice of not really understanding what his Dickensian monopoly actually does as an “enterprise.”


Hong Kong’s Proposed New Board For Start-Ups Draws Fans & Critics (subscription)

Enoch Yiu – SCMP

Mainland Chinese start-ups are keen to list on the proposed third board by HKEx, but they face opposition from those who worry about the potential impact on the reputation of companies on the new stock market.

Private Markets

Foreign Bidders Prepare To Board Baltic Exchange (subscription)

Kate Burgess – Financial Times

FAO: SGX is one of them, as reported last month.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Flat day.


ICAP Unveils CrossTrade


ICAP Global Broking has expanded its electronic capabilities by unveiling TrueQuote, a new portal for buy side clients. The portal will offer a number of multi asset class solutions over the coming months and launches with its first fixed income solution, ‘CrossTrade.’

PLY: Interesting, three key words here “buy side clients.”


MarketAxess To Launch Electronic Trading for $3.6 Trillion Municipal Bond Market


MKTX expects to have approximately 60 dealers and 250 institutional investor firms connected to the municipal bond platform when it launches.

QV Premium: The Bond Platforms Rush Brief – Part 2.


FTSE Russell Signs Collaboration Agreement With Trendrating


Trendrating to work with FTSE Russell to develop momentum indexes. New indexes will be based on FTSE Global Equity Index Series.


MV Index Monthly Roundup -0.7% Amidst Bid Rumours


Career Paths

SEC named Anthony S. Kelly as Co-Chief of the Enforcement Division’s Asset Management Unit, which focuses on misconduct by investment advisers, investment companies, and private funds.  He joins Marshall Sprung as Co-Chief of the unit and succeeds Julie Riewe, who left the agency last month.

Algomi named Tom Glocer, former CEO of Thomson Reuters, as a Strategic Advisor and appointed Howard Edelstein to the board, after serving two years as a Strategic Advisor. Edelstein is the former Chairman & CEO of BondDesk and is an investor in Algomi. Glocer has also made an investment in the business.

JonesTrading appointed Brian Tafaro and Khahlil Kirtman to build Asia trading. Prior to joining JonesTrading, Mr. Tafaro was MD, Co-Head of Japan Shares Execution Services at Goldman Sachs. Mr. Kirtman was VP/Manager of International Sales Trading, also at Goldman Sachs. They report to Alan Hill, JonesTrading’s CEO.

Financial Calendar

11.03 – TMX $0.40 dividend payment

Next week

14.03 – Record date Nasdaq $0.25 quarterly dividend

14.03 – Interactive Brokers $0.10 quarterly dividend payment

16.03 – Record date ICE $0.85 Q1 dividend

16.03 – Record date NZX 3.0 cents 2015 final dividend

16.03 – BGC Partners $0.14 quarterly dividend payment

18.03 – CBOE $0.23 quarterly cash dividend payment

18.03 – ITG $0.07 quarterly dividend payment

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

Other stories

SEC Urged To Beef Up Trading Safeguards (subscription)

Nicole Bullock & Joe Rennison – Financial Times

Vanguard & Virtu Financial are among a group of financial industry heavyweights urging SEC to help avoid a repeat of the chaotic trading that rocked markets last August.

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