March 14 2016

elb2So DB1 have already been moved to desperation… An increased bid is being hyped: might the gradual clarity of the anschluss that Germany will now demand prove a price too high for Londoners not within that inner core of highly incentivised LSE management? DB1 haven’t so much as blinked as demonstrated a high level of cabin fever panic by the sound of it. You have to hand it to XavRol, nobody quite knows how to sell a used stock exchange like him! Meanwhile the media have got around to airing those “CarKen” rumours that he was rather close for comfort to the LIBOR endeavours.

BSE has permission to list from SEBI is the seismic Indian news while in India Jignesh Shah is moving closer to startups. Away from the fever pitch of merger mania, TriOptima calmly compresses everything, even Polish Zloty swaps.

…which reminds me, before we all get carried away with the silly singularity of German pathology for annexing London, the deal LSE ought to do is in Premium today, entiteld, coincidentally: The Deal The LSE Ought to Do. Make the leap to get the value added insights ahead of the curve – and vastly ahead of the compression process, only $300 per user/year. Hit the reply button & ask for an invoice…

Meanwhile in Bigworld, my latest OpEdge column discusses the ECB’s failings and its waning bazooka fixation.

Public Markets

ICE Rule 2.10 Announcement


DB1 Could Hike Offer For LSE

Tim Wallace – Daily Telegraph

DB1 could increase its offer to buy LSE this week, potentially hiking its bid for the British institution as soon as today.

Carsten Kengeter Was Viewed as Possible Libor Co-Conspirator (subscription)

David Enrich & Shayndi Raice – Wall Street Journal

Carsten Kengeter is on track to run Europe’s largest stock exchange. Three years ago, British prosecutors viewed him as a possible co-conspirator in the global interest-rate-rigging scandal.

PLY: Well ‘CarKen’ is keen to show himself as a committed City of London anglophile living in Wimbledon etc, perhaps he just got the assimilation manual a bit wrong when still banking?

Now, picture the scene. In 9 months or so we may have an ex-Lehman banker & sometime LIBOR suspect endeavouring to convince the EU’s antitrust dudes of the merits of this deal as being in the best interests of a safe, secure, trusted market infrastructure.

In other news, the need to pay more – and clearly stump up some cash – means  DB1 anticipate a Chairman/CEO clean sweep within 3 years apparently. Given the void which is DB1’s concept of strategic management, this strikes me as a move of kamikaze proportions for investors.

ICE Would Keep LSE If It Bought LSE Group

John Detrixhe & Aaron Kirchfeld – Bloomberg

PLY: Given that the failing in the micromanagement of XavRol has been to actually tear the process heart of the LSE to bits and rebuild, there is clearly some of that ICE management to be enjoyed in reorganising and customer focussing various arms of LSE. Still not sure they can pass antitrust with LCH.Clearnet either but they would make LSE/FTSE-Russell et al genuinely efficient in the mould of LSE’s better organisational structures, like Turquoise.

QV Premium: DB1-LSE Merger Brief.

Here’s What’s At Stake For London’s Trading Share In A `Brexit’

Silla Brush & John Detrixhe – Bloomberg

PLY: The lure of growth as against a promise of decay, that’s the binary which leaves the blob desperate to maintain their ineffective gravy train status quo and beggars the continent. QV my OpEdge column today. For the City of London, what not to like? Being able to trade freely with the world’s future or being joined along the national debt line with a dysfunctional delusional empire. QV: SInce 2008, Chinese economy has more than doubled, Eurozone is still below its pre-Lehman collapse peaks. It’s not a question of whether the UK leaves or not, the EU is headed inexorably towards the big “Game Over” sign without wholesale reform.

SSE Says Reached Preliminary Agreement With LSE On Stock Trading Link


Shanghai SE (SSE) said on Friday it has reached a preliminary agreement with LSE on a co-operation framework for a planned stock trading link.


OPINION: An Acquisitive Nasdaq

Rob Daly – Markets Media

PLY: Useful review of the NASDAQ options purchases.


IEX Gains Backing Of Calstrs To Become A Stock Exchange (subscription)

Nicole Bullock – Financial Times

The California State Teachers’ Retirement System (Calstrs), with a portfolio valued at $180bn, joined the ranks of other large institutional investors, academics, and retail investors who have voiced support for IEX.

PLY: Good. There is no coherent reason to refuse IEX a licence – let the market decide who wishes to use the product as opposed to the hectoring of the vexatiously self-interested.

Private Markets

BSE Gets In-Principle Nod For IPO From SEBI

Business Standard

Ashish Kumar Chauhan, MD & CEO, BSE said it will take around six to nine months for the exchange to file its offer document with Sebi.

Sebi: Self-Listing Of Exchanges Poses Conflict Of Interest Risk

The Economic Times

PLY: The lack of trust in Indian commerce remains a crucial sticking point moving forward which is not helped by the attitude at the top of the regulatory tree.


Taiwan SE Wants HK Investors But Has No Plans For A Stock Connect Scheme (subscription)



DSE, CSE To Be Exempted Of Tax This Fiscal Year

Dhaka Tribune

Dhaka SE & Chittagong SE will be exempted from tax on their income for the current fiscal year so the bourses can go ahead smoothly during the post-demutualisation time.


YSX To Begin Trading This Month

May Oo – Xinhua

Myanmar’s Yangon SE (YSX) will begin trading on March 25.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX up 2%, FTIL flat.

After NSEL, It’s Start-Up Dreams For Jignesh Shah

Jayshree P. Upadhyay – Livemint

Jignesh Shah, the founder of FTIL and main accused in the NSEL fraud, is attempting to build two new technology platforms to offer incubation and other facilities to start-ups, after being released on bail in August 2014.

PLY: Some who are closely involved in the startup community (I claim some form here too….even including my university course on the topic…) would recognise the startup world as exciting, dynamic and often populated with some charlatans, many of whom appear downright dodgy. Now in India Jignesh Shah is pivoting away from the exchange world which has spurned him towards startups. It could prove lucrative. Note Tom McMahon, former NYMEX exec who ran SMX for FTIL is Chairman of an entity involved in Shah’s startup initiatives.

QV Premium: NSEL Scandal Brief – Part 16.


WFE Calls For Vigilance & Coordination As Industry Backs Global Cyber Standards


PLY: Good call by the WFE. DDoS alone has been in the exchange arena for years (e.g. on Intrade a decade or more ago). There needs to be a lot more stringency with a broad church approach surely the best way forward, particularly as, while WFE has heft, it is more a one-third World Federation of Exchanges and not a truly global entity (akin to the UN for instance). WFE are right to oppose overly prescriptive IOSCO remits but I think the exchanges could benefit from outside expert input to give the initiative more heft. A good start all the same.


Turquoise To Launch ‘A-list’ ETF Platform (subscription)

Tim Cave & Mark Cobley – Financial News

Turquoise is to launch a specialist market for ETFs in a bid to boost liquidity in the products.


TAIFEX Received SEC Class Relief For Index, Equity & ETF Options



Nadex Widens Currency Contracts Offering

Maria Nikolova – LeapRate

New Daily EUR/GBP and AUD/JPY ‘Wide’ & ‘Narrow’ Spread contracts.


Sebi To Launch New Commodity Products, Allow More Participants


Sebi will introduce new products and allow more participants in the commodity derivatives market, a move which could pave the way for entry of banks and FPIs into the segment.


FM To Sebi: Be Alert On Supervision; Deepen Commodity Markets

The Economic Times

Asking Sebi to be alert on market supervision, Finance Minister Arun Jaitley asked the regulator to take steps to expand investor base and deepen the commodity derivatives segment.


TriOptima Compression Exceeds $750 Trillion In Eliminated Notional Principal


triReduce Polish Zloty Compression Cycle Eliminates 40% Of PLN Notional Outstanding In LCH.Clearnet’s SwapClear


PLY: Another great week for reductionism and I do feel Michael Spencer’s knighthood could easily be devolved on the basis of services to the swap industry through backing TriOptima alone.


OTC Derivative Reform & Global Equivalence – Is There Ever Really Equivalence?

Richard Baker, MondoVisione


ESMA Consults On Securities Financing Transaction Regulation


ESMA has issued a Discussion Paper (DP) on rules under the Securities Financing Transaction Regulation (SFTR).


MOEX Data Products


From 15 April 2016, MOEX will provide real-time market data and end-of-day files for download to proprietary databases and user applications only to subscribers of its information products.


Europex Calls For Reintroducing The Alternative Instrument Identifier (AII) As An Alternative To ISIN And Recommends Aligning The Timing Of The Financial Instruments Reference Data Obligation Under MiFIR & MAR



SASE Set To Launch Islamic Share Index


Bosnia’s Sarajevo SE (SASE) & Bosna Bank International (BBI) signed a deal on Friday to launch an index of listed firms compliant with Islamic investment principles.

Career Paths

Treasury Committee published its report on the re-appointments of Dame Clara Furse DBE and Richard Sharp to the BoE’s Financial Policy Committee.

CalPERS selected Marlene Timberlake D’Adamo as CCO. She assumes her new role on April 11.

David Thomas, erstwhile Head of Communications at the World Federation of Exchanges is heading back to DB1, perhaps just in time given DB1’s ‘merger of equal desperation’ manoeuvres, to work in London & Brussels.

PLY: I wish David every success and sorry to hear he has left the WFE which is making great strides to push forward again under CEO Nandini Sukumar after some upheaval in recent years.

Financial Calendar

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

15-18.03 – FIA Boca 2016

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

Analyst Notes

Deutsche Bank Maintained “Buy” Rating On Nasdaq – $70 Price Target

A full table of current analysis can be found on our Analyst Ratings page which is updated daily.

Other stories

CSRC: China Won’t Reintroduce Stocks Circuit Breaker Soon


Liu Shiyu, Chairman of CSRC – China will not reintroduce the circuit breaker mechanism to its stock markets in the next few years.

CSRC: China Must Push Forward With IPO Registration Reform



Jailed Libor Trader To Return To London Court In Battle Over Assets

Kirstin Ridley – Reuters

Tom Hayes will next week return to a London court in a multi-million pound battle against prosecutors over assets that include a seven-bedroom country house.

PLY: Hayes remains the unique LIBOR conspiracist, a fascinating footnote in legal history but perhaps not a good position for what prosecutors (under duress for recent embarrassing failures) view as his ill-gotten gains. (If only we had a similar programme for, say politicians who waste money, or even exchange executives who make critical merger errors).


FESE European Equity Market Report – February 2016 Figures



Statement Of CFTC Commissioner J. Christopher Giancarlo, Sponsor Of CFTC Energy & Environmental Markets Advisory Committee



FINRA Evaluates Membership Application Rules – Finds Rules Have Been Effective, & Begins Process Of Updating



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