March 22 2016

elb2NASDAQ buys a neat little morsel to add to its IT services portfolio as Australia’s leading regulator delivers a shocking endorsement of former ASX CEO while a Federal investigation looks at pure play corruption. LME deal on the new Silk Road, while there is widespread speculation that Markit just sold itself cheap… DB1 deal remains a topic for ongoing scepticism in UK media but then again until they are capable of grown up messaging, they deserve all the criticism their merger of equal desperation is attracting and heaps more. Meanwhile SEC looks to be rewriting rules and a microscopic de minimis definition may change US equity markets significantly…

Public Markets

Hellenic Exchanges Athens SE FY 2015 Results

Reuters

vs FY 2014: consolidated revenue 35.0m euros, down 26%, net profit 9.0m euros ($10.12m), down 57%.

PLY: The Helex almost deserves plaudits for sticking doggedly to profitability while the Greek economy collapse all around it.

 

Nasdaq Agrees to Acquire Boardvantage

Nasdaq

Nasdaq’s Friedman Bulks Up Board Business in $200 Million Deal

Annie Massa & Matthew Leising – Bloomberg

Nasdaq agreed to buy Boardvantage, a business that allows corporate boards to exchange information, as COO Adena Friedman helps continue a spate of dealmaking in an industry full of activity.

PLY: Neat deal for NASDAQ. Adds incremental value to the department store technology offerings (Technology solutions 28% of revenue at NASDAQ nowadays).

 

A Merger Of Equals? Pull The Other One

Christopher Williams – Daily Telegraph

It is bizarre that anyone still bothers to claim to have agreed a “merger of equals” when the concept has been shown time and again to be either a public-relations-driven fantasy or an all-too-real disaster. Yet here comes another one, hot on the heels of LSE & DB1..

The latest to adopt the pose (reported yesterday), the business information providers Markit and IHS, are less equal than most. Following the $13bn (£9bn) combination, shareholders in Nasdaq-listed, London-based Markit will hold only 43% of equity. Conveniently enough, IHS shareholders’ 57% falls just short of the 60% threshold that would trigger the US Treasury’s clampdown on tax inversion deals.

PLY: The thing which is most perturbing is that whereas XavRol has secured an underpinning (albeit without premium) of his hypey valuation for the less integrated and more deal oriented LSE, is that I think Markit just sold itself horribly short. The bidding war underpinned by an IHS offer may yet turn much more interesting… NASDAQ, ICE and indeed were it not already committed to selling out, LSE, all ought to be looking at this as indeed ought DB1 and CME. However the 3.5% market cap break fee leaves open the charge that actually Markit management have simply lost their minds. At least LSE is open to any offer without a breakup…but Markit remains a way more interesting entity when measured against the antitrust opportunity cost of DB1-LSE proving to be a Twix too far…QV. Understanding CCP & the AntiTrust DB1-LSE Merger.

Why This Financial Data Company Looks to Have Undersold Itself (subscription)

Paul J. Davies – Wall Street Journal

IHS is doing better out of this deal than Markit’s shareholders. It could also be an opportunity lost for a company like ICE to absorb Markit into a pure trading and market services group.

 

ICE Rule 2.10 Announcement

ICE

 

JPX: 2nd Medium-Term Management Plan For FY2016 To FY2018

MondoVisione

 

SEC Interpretation Could Lead To IEX Copycats (subscription)

Financial Times

PLY: A move by the regulators to view a millisecond as de minimis may upset the apple cart and allow chicanery left, right and centre – which is clearly a dagger through the heart of the most predatory HFT. I must say I think it sounds, well, civilised. In one sense it either makes NMS work better or it causes the whole over-engineered travesty to collapse…

 

Next ASX Boss To Face Global Merger Upheaval

Andrea Tan & Jonathan Burgos – Bloomberg

Elmer Funke Kupper, 50, stepped down on Monday as police investigate activities in Cambodia of the Australian betting company he formerly led. The departure comes as global peers embark on a further round of consolidation that threatens to leave ASX facing more powerful rivals. The Australian government has said a takeover of the stock exchange would be against the national interest.

PLY: In what is little short of astounding, the ASIC Chairman has made a remarkable intervention on radio expressing huge disappointment at the ASX CEO’s resignation – which surely brings into question the proximity of the national regulator to an avowed monopoly exchange advocate. Not altogether so shocking given ASIC’s past track record but Australia ought to be a lot more open to competition and markets than, say, post Communist transition adolescents, like Poland, no?

QV Premium: A Tribute to Elmer Funke Kupper As ASX CEO and ASX Monopoly – Brief – Part 3.

 

LME Deploys Shield Repository To Support Belt & Road Initiative

MondoVisione

LME Strikes Warehouse Receipt Deal With China (subscription)

Neil Hume & Henry Sanderson – Financial Times

LME has struck a deal with one of the China’s biggest logistics companies to use its electronic warehouse receipt system, as the bourse looks to capitalise on growing concerns about falsified documents.

In the first phase of the agreement, China Materials Storage and Transportation Development (CMSTD) will list one of its warehouses as an LME Shield facility along the Maritime Silk Road, which runs from China through Southeast Asia.

PLY: Warehouses to facilitate the new Silk Road. Neat.

 

ESMA Writes To European Commission On Draft MiFID II RTS

MondoVisione

Dividend News

Hellenic Exchanges Athens SE proposes FY 2015 dividend of 0.10 euros per share.

HKEx – Forfeiture of Unclaimed Final Dividend for 2009 – announcement.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX & FTIL both up around 1%.

Technology

Broadridge Invests In & Enters Into An Alliance With LiquidX, Inc.

MondoVisione

Broadridge made a strategic investment and entered into a referral, sales and marketing alliance with LiquidX, Inc. (LiquidX), the provider of an electronic exchange platform for global trade finance.

PLY: Very interesting. There are a lot of cool new exchange projects on the go currently.

Products

ICE’s IDC–S&P Evaluated Pricing Tie-Up Sparks Competition Concerns (subscription)

Waters Technology

Data consumers have expressed fears that the ICE’s acquisition of market data provider IDC last year and S&P’s Securities Evaluations division earlier this month will create a monopoly in evaluated fixed income pricing that could lead to price increases, while some users are searching for alternative pricing providers to serve as their secondary sources in the wake of the deal.

PLY: Interesting given the actual price paid for the S&P product was barely a blip on the deal radar – but strategically important as I noted at the time. Monopoly? Not sure BUT this is a very interesting salvo at the start of what will erupt during 2016 – the data war. That ought to further tie up the merger of equal desperation between DB1 and LSE in the antitrust process.

 

To Ensure Data Quality, Keep Long Leases on Short Leashes

Max Bowie – Waters Technology

There’s an old saying in the data world that—much like beer—you never really buy market data, you merely lease it. After all, you rarely have any of the rights that would usually come with ownership of a commodity. Instead, what you can do with data is often severely restricted, and any rights that you do obtain outside of normal usage come at a high price.

 

Garry Jones: HKEx Will Create A Central Marketplace For Commodities (subscription)

Metal Bulletin

HKEx is putting together a business plan and structure for a central marketplace for commodities in China that will create an Alibaba-type equivalent for the asset class.

PLY: Entirely logic buildout for HKEx as it moves to capitalise on the LME brand and its access to global markets.

 

Russia’s Monopoly Regulator Plans Oil Benchmark

TASS

Russia’s Federal Antimonopoly Service (FAS) plans to launch the country’s oil benchmark in Q4 of this year, Deputy Head of FAS Anatoly Golomolzin said Monday.

 

Algo Rules Could Catch Commodities Trades (subscription)

Gregory Meyer & Philip Stafford – Financial Times

 

Liquidnet Begins Trading In Taiwan Stocks

Michelle Price – Reuters

 

NCDEX Imposes Special Margin On Short Side Of Kapas Contracts

The Economic Times

NCDEX imposed a special margin money of 5% on short side of all running contracts of kapas.

Indexes

A First In Turkey From Borsa İstanbul: Leveraged & Short Indices Will Be Calculated

MondoVisione

Career Paths

LSEG announced that Baroness Sharon Bowles, Sherry Coutu, CBE, and Stuart Lewis will step down from the LSEG Board on 26 April 2016.

Baroness Bowles and Sherry Coutu have been NEDs since 2014 and will remain with the Group as NEDs of London SE plc and will also join the LSEG Board’s Regulatory and Technology Advisory Groups to be formed in 2016.

Stuart Lewis, who joined the Board in 2013, will continue to serve as an adviser to LSEG’s Risk Committee. Mary Schapiro and Paul Heiden are joining the Remuneration Committee.

PLY: Interesting. Stuart Lewis may have an issue being with Deutsche Bank as well as the merger activity but it is difficult in the race to pixel to understand clearly why the haste with these moves, also shuffling Sharon Bowles the formerly influential ECON Chairman LibDem MEP off the main group board…

 

God’s Will Or Not… Is Carsten Kengeter Really The Right Person For The Top Job At LSE?

Alex Brummer – Daily Mail

Carsten Kengeter doesn’t seem to have a great way with words. QV Premium: DB1-LSE Merger Brief.

“Kengeter’s talk of the ‘clock ticking’ for Europe hints at a sense of desperation rather than the reality. Both exchanges have their strengths and selling them short risks the image of the deal being seen as two drunks holding each other up.”

PLY: Stinging criticism of CarKen who has amply demonstrated why I believe he needed to reform at home before doing a deal – his PR is rubbish, his IR dire with messaging so utterly third rate, if it came from a flailing AIM mining stock, it would still be unacceptable.

 

Was the ASX Funke Kupper’s Last CEO Gig? No, Say Headhunters

Fiona Smith – AFR

QV Premium: A Tribute to Elmer Funke Kupper As ASX CEO.

 

CMA Board of Commissioners has approved the Saudi SE BoD request to appoint Mr. Khalid Abdullah Al Hussan as CEO effective from 21/3/2016.

 

SEC named Keith E. Cassidy as Director of the agency’s Office of Legislative and Intergovernmental Affairs. Mr. Cassidy succeeds Tim Henseler, who was named Office Chief in the Division of Corporation Finance’s Office of Enforcement Liaison.

 

Bloomberg reports that JPMorgan promoted James Banghart & Matthew Greenberg to co-heads of emerging-market credit trading, replacing Robert Milam, who left last month amid volatility in the asset class and a raft of departures.

Banghart & Greenberg will report to Kevin Corgan & Sanjay Jhamna, who oversee credit trading for North America & EMEA.

Financial Calendar

24.03 – ICAP – TNT – vote on transaction

New! – 20.04 – SGX Q3 Results FY2016

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

Share Notes

Thomson Reuters Director Peter Warwick sold 17,667 shares Friday, March 18th at C$39.39 (bargain C$695,952.60).

Crowdfunding

Lending Club Rediscovers Its P2P Roots (subscription)

Ben McLannahan – Financial Times

Other stories

ESMA Publishes Responses To The Discussion Paper On Validation & Review Of Cras’ Methodologies

MondoVisione

 

CMU & The European Monetary & Financial Framework – Keynote Speech By Vítor Constâncio, VP Of The ECB, At Chatham House, London, 21 March 2016

MondoVisione

 

The World Federation Of Exchanges Releases Research Paper On SME Markets

MondoVisione

PLY: Interesting news from WFE, not had any chance to look at this yet as Exchange Invest raced to pixel.

 

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