March 16 2016

elb2Salvation for clearing in the form of Trans Atlantic CCP equivalency finally being adopted by the EU. Thank goodness! Long months in antitrust scheduled for at least a few EU CCP pools with DB1 determined to drag LSE around Brussels for a year or more of pointless discussion. Yes indeed, the “Merger of Equal Desperation” is on – until a better offer comes along for either party, hopefully.

There is already an extensive canon of material on this concept of a merger in Exchange Invest Premium (see below for links). Access to all this and more content for only $300 per user / year…

Elsewhere, pressure mounting in Australia as Federal Police investigate the Cambodian excursions of TABCorp when ASX CEO was in charge. Apparently NYSE are proposing an order type which replicates one of IEX’s specials… Interesting.

Public Markets

DB1 & LSE Agree To Industry-Defining Merger

DB1

Recommended All-Share Merger Of Equals Of LSE & DB1

MondoVisione

LSE, DB1 Agree On Merger

John Detrixhe – Bloomberg

DB1 & LSE agreed to merge, a deal that would create a titan of European trading as long as rival suitors don’t upend the agreement and regulators give it their blessing.

LSE’s equity holders will own 45.6% of the enlarged group, while DB1 stockholders will get the remaining 54.4%. The two companies announced on Feb. 23 that they were negotiating a deal. The companies are valued at $30.5 billion.

QV Premium: DB1-LSE Merger Brief.

PLY: Hmmm, industry defining – what like British Leyland was to the UK car industry? No change to the deal as previously suggested by mainstream media and still no clear understanding why the companies think they are going to spend a fruitful year or more with EU antitrust. Presumably powder being kept dry for the anticipated other bids.

See also Premium coverage, including:

The Deal The LSE Ought to Do
Costcutting Dreams
Life in Limbo
CCP is Not Syllogistic
Merger Mania 2016 The Story So Far
World Exclusive: OTC versus ETD Clearing Clarification
LCH.Clearnet – A Footnote of Vital Importance
CME: Turning the Other Cheek
If This Is Learning Perhaps DB1 Should Attempt Ignorance?
As Time Stands Still
Be Careful What You Wish For
Xavier: Where Did It All Go Wrong?
A Simple Numerical Progression
The Clearing Singularity
Agitprop & Mergers
Flying A Kite
DB1 LSE A Ponzi of Equals?

 

European Commission Adopts Equivalence Decision For CCPs In USA

MondoVisione

PLY: Finally! Great news all the same even if it has been a chapter which has been a shameful example of regulatory failure for far too long.

 

ASX CEO Elmer Funke Kupper ‘Not Going Anywhere’ In Face Of Bribery Probe

Jared Lynch – SMH

Australian Federal Police Investigates Tabcorp’s Cambodian Payment

Perry Williams – SMH

Gaming giant Tabcorp faces an investigation by the Australian Federal Police over a $200,000 payment it allegedly made in 2009 (reported yesterday) to the family of Cambodian Prime Minister Hun Sen when exploring the possibility of obtaining an online gaming licence in Cambodia.

The $200,000 sum was channelled via the US to Cambodia in early 2010, when ASX CEO Elmer Funke Kupper was boss of Tabcorp and examining, with a small team of executives and advisers, how the gambling operator could expand into Asian sports betting.

PLY: EFK adopts his traditional stubborn stance in face of pressure but given this is, if memory serves me correctly, the second open investigation into TabCorp from his CEO stint, questions really are mounting.

 

ICE, Nasdaq, Targeted By Fake U.K. Filings

Tim Cave & Giles Turner – Wall Street Journal

Someone is pretending to make U.K. regulatory filings on behalf of ICE & Nasdaq, using the name of their CEOs and shareholders. A company called Bolsa de Valores Nova York Ltd – Spanish for New York SE, which ICE owns – was registered with the U.K.’s Companies House on March 2.

This was done less than two weeks after a new company called Nasdaq Inc. Ltd was registered on February 23. Companies House is the U.K. business register.

 

Closer Ties ‘Will Benefit Not Hinder’ Hong Kong (subscription)

Kwong Man-ki & Enoch Yiu – SCMP

Qian Keming, vice commerce minister, says Hong Kong will benefit from closer ties with the nation, hitting back at Moody’s decision to cut the city’s long-term debt outlook because of its increasing linkages between the two sides.

The financial market between the mainland and Hong Kong will also see closer cooperation as the much-anticipated plan connecting the Shenzhen SE & HKEx will likely be launched in H2 of this year.

QV Premium: HKEx – SZSE Stock Connect and HKEx – SSE – Stock Connect Brief Part 3.

Private Markets

Metropolitan SE Plans Rs 105-cr Mop Up To Meet Norms, For Expansion

The Hindu Business Line

Metropolitan Stock Exchange of India (MSEI), formerly MCX SE, has decided to raise Rs 80 crore (USD 11.9 mln) through a private placement of equities and debt. MSEI is also planning to raise Rs 25 crore (USD 3.7 mln) through equity issue for its clearing corporation subsidiary to meet the SEBI norms.

Udai Kumar, MD & CEO of MSEI, told reporters on Tuesday that additional equity worth Rs 60 crore (USD 8.9 mln) would be placed within next couple of months. “Around Rs 20 crore (USD 2.97 mln) worth of debt would also be raised by April. These equity and debt funds would be utilised to roll out our business expansion plan,” Kumar added.

MSEI currently has a paid-up capital of Rs 194 crore (USD 28.8 mln). In the present holding structure of the exchange, banks/financial institutions, individuals and corporate entities appear as promoters.

Metropolitan Clearing Corporation of India, which has a paid-up equity of Rs 75 crore (USD 11.13 mln), has to be raised to Rs 100 crore (USD 14.9 mln) by April.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX down 2%, FTIL down 1% as SEBI action begins against NSEL brokers, at last the blob slithers towards progress and perhaps some restitution?

Sebi Begins Action Against NSEL Brokers

Jayshree P. Upadhyay – Livemint

Three years after the NSEL scam and eight months after the merger of FMC with Sebi, action against NSEL brokers is on the cards. The capital market watchdog has formed an investigative team to look into their role. “Sebi has formed an investigative team-cum-committee to look into the allegations against the brokers of NSEL,” said one source.

PLY: Excellent – a committee has been formed. Wow, defaulters and fraudsters may have been worried there for a moment.

Court Appoints Knight Frank As Consultant In NSEL Case

Dilip Kumar Jha – Business Standard

To speed up the liquidation of attached properties of defaulters of NSEL, the sessions court has appointed Knight Frank India as a global consultant to bring in buyers.

QV Premium: NSEL Scandal Brief – Part 16 and SEBI-FMC Merger Brief.

PLY: Actually much better progress, get the property sold…

Technology

CME Sells Aurora, Ill. Data Center To CyrusOne For $130m

CME

CME entered into a definitive agreement to sell its suburban Chicago data center in Aurora, Ill. to CyrusOne for $130 million.

As part of the sale, CME will enter into a 15-year lease for data center space and will continue to operate CME Globex from the data center and will offer co-location services there. CME will have the ability to expand co-location services within the leased space going forward.  

PLY: Interesting deal, sale and leaseback has many tax advantages as well as flexibility pointers et al. CME don’t need to own data centres per se but at least they weren’t on the industrial scale of the remarkable to recollect world of NYSE Technology.

 

ICAP’s Post Trade Risk & Information Division Announces Completion Of A Blockchain Proof Of Technology

ICAP

PLY: Pretty clean, simple, sensible experiment complete, well done. Thanks too for the sensible, hype free press release.

 

Duco & CME Team Up To Provide Innovative Data Control Service To Member Firms

MondoVisione

PLY: Interesting.

 

NICE Actimize Launches Cross-Asset Cloud Markets Surveillance Solution Featuring FX And Case Management Capabilities

MondoVisione

Products

ICE Clear Credit Launches Asian Corporate Index & Sovereign CDS Clearing

ICE

 

BoE Says Regulators May Lighten Capital Burden On Derivatives

Huw Jones – Reuters

Global regulators will propose ways that could ease capital requirements for banks that clear large numbers of financial derivatives.

Stephen Bland, a director and strategic adviser at the BoE’s Prudential Regulation Authority, said the global Basel Committee, which wrote the leverage ratio rule, was working on the issue.

 

Buyside Backs Esma Over Trade Reporting Codes (subscription)

James Rundle – Financial News

A group of influential buyside trade bodies has come out in support of a controversial identifier used in reporting derivatives trades, while Europe’s top markets regulator says that those opposed are not reading the rules correctly.

 

Thai Bourse Joins SEC & Mutual Fund Participants To Launch New Fund Service Platform

SET

 

ICAP Expands Its Post Trade Risk & Information Division MiFID II/MiFIR Suite Of Services

ICAP

 

UK’s Serious Fraud Office Closes Forex Investigation

MondoVisione

Britain’s Fraud Office Drops Forex Market Investigation

Huw Jones & Jamie McGeever – Reuters

PLY: Insufficient evidence found by the SFO after probe began in July 2014…

 

MSEI Chalks Out Five-Year Turnaround Strategy

Business Standard

Metropolitan Stock Exchange of India (MSEI), formerly known as MCX SE (MCX-SX), has drawn a new turnaround strategy, under which it will position itself as an exchange for alternative financial asset class, like currency, interest rate future (IRF), bulk and block deals and ETFS.

 

Markit Launches FX Trade Affirmation Service

Markit

Markit launches a new service that enables banks to affirm FX trades executed by IDBs. Seven IDBs and eight banks have signed to use the service, which expands Markit’s centralised solutions for the FX market.

Indexes

BME Will Launch A New Series Of Índices On Stocks – New Strategy Indices Calculated & Disseminated In Real Time As Of 12th April

MondoVisione

 

NSE & SGX To Launch The World’s First Offshore Indian Sector Futures

MondoVisione

 

SGX Plans To List Contracts On MSCI China Free Index

MondoVisione

As discussed yesterday.

Career Paths

NYSE Completes Move To A New Regulatory Approach & Announces Key Leadership Appointments

ICE

NYSE has transitioned most of its regulatory functions to an in-house team away from FINRA. Each Exchange BoDs has formed a Regulatory Oversight Committee made up of independent Directors. NYSE’s Chief Regulatory Officer (CRO) reports to each of the Committees.

Anthony J. Albanese has joined NYSE as the new CRO. Most recently, Albanese served as the Acting Superintendent for the New York State Department of Financial Services. Mary Brienza, the current CRO, will retire from the NYSE in June.

In addition, John Tuttle has been promoted to Global Head of Listings, having spent nearly a decade with NYSE in a variety of management positions, most recently Chief of Staff. Garvis Toler, Global Head of Capital Markets will continue driving new business growth for IPOs and will work closely with Tuttle. Both report to Tom Farley, NYSE Group President.

ITG hired Thomas D. Shpetner as Global Chief Compliance Officer on April 12, 2016. He will report to ITG MD & General Counsel Angélique DeSanto. Mr. Shpetner joins ITG from RBC Capital Markets, where he oversaw compliance for the firm’s commercial banking business and also served as head of U.S. equities compliance.

FIA announced the election of directors to its board at its annual meeting in Boca Raton, Fla. Seven directors were elected at this meeting for one and two-year terms.

 

Directors elected to one year terms:

Nicholas Rustad, J.P. Morgan Securities

Michael Voisin, Linklaters

Andrew W. Gooch, GF Financial Markets (UK)

Dr. James Overdahl, Delta Strategy Group

 

Directors elected to two year terms:

Dr. James Overdahl, Delta Strategy Group

Arthur W. Hahn, Katten Munchin Rosenman

Kenneth M. Raisler, Sullivan & Cromwell

Christopher Hehmeyer, HTG Capital Partners, LL

 

John Dabbs of Credit Suisse Securities (USA) was selected to fill a vacancy left by Jeffrey Jennings of the same firm. Maureen Downs of Rosenthal Collins Group was selected to chair the Americas Advisory Board, a role previously filled by Gerald Corcoran of R.J. O’Brien & Associates.

 

FIA board members approved an amendment to the bylaws that expanded the number of available board seats. The following directors were appointed to these seats:

Gerald Corcoran, R.J. O’Brien & Associates

Tom Kadlec, ADM Investor Services

George Simonetti, Wells Fargo Securities

 

The FIA Board also voted for the following officers:

Chairman: Michael Dawley, Goldman Sachs

Vice Chairman: Jerome Kemp, Citigroup Global Markets

Secretary:M. Clark Hutchison, Deutsche Bank Securities

Treasurer: Gerald Corcoran, R.J. O’Brien & Associates   

 

Officers of FIA‘s BoDs are automatically members of the executive committee. The following individuals were also selected to serve on the executive committee, in addition to Walt Lukken, President & CEO of FIA, who serves on the board ex officio:

Craig Abruzzo, Morgan Stanley

John Dabbs, Credit Suisse Securities

David Escoffier, Société Générale Corporate & Investment Banking

Raymond Kahn, Barclays

Najib Lamhaouar, HSBC Securities (USA)

Edward Pla, UBS Securities

Steve Sparke, Marex Spectron

Dean Tonkin, Bank of America Merrill Lynch

PLY: Congratulations to all concerned although the FIA needs more directors on its board? Maybe it’s a way to fight the next recession – the FIA and CME will agree to have joint board meetings in recession-hit states. Given the size of each, that’s like having a hefty dose of real economy QE just in sandwiches, cookies and mixers alone.

 

InvestCloud, the global cloud-based digital applet platform for financial services, appointed Andrew Reid Thomas as EVP, Head of Sales for Europe.

Financial Calendar

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.

Share Notes

CME Chairman Terrence A. Duffy sold 15,340 shares Wednesday, March 9th at $93.51 (bargain $1,434,443.40). He now owns 92,244 shares.

Other stories

Volcker Rule CEO Attestation Delivery Method Announced

CFTC

 

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