MARCH 6 2017

Issue 946 celebrates the Porsche 924S, the 2.5 litre larger engine car whose lhd design shared this type number with today’s edition of parish market structure news.

In Today’s Exchange Invest

I am very sorry to report the death of Clayton Yeutter, a gentleman of agriculture and the futures industry, who has succumbed to cancer at the age of 86.
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Meanwhile, in deals, EEX swoops for Nodal Exchange. Peter Reitz further expands his excellent energy exchange empire within DB1.

Parish bourses everywhere have women campanologists at the helm of opening ceremonies while there is an excellent new paper in the public domain from the ever-sharp mind of John McPartland at the Chicago Fed.

And there’s more, happy scrolling:

In BigWorld

Aberdeen Asset Management and Standard Life agree a $13.5 billion merger, confirmed this morning after news only leaked out over the weekend…clearly the Obama White House wasn’t monitoring these discussions or we would have heard about it much earlier. Seriously, this is the start of a big move, think tectonic. The “massive passives” are in urgent need of vast reform and this looks to be a start to what will amount to a bloodbath of buy side job cuts which hopefully results in better, cheaper process and lower fees to customers.

Meanwhile automaker GM is selling Vauxhall Opel to Peugeot. This is pertinent to the parish as it means Frankfurt’s jewel of car production (spelt: “u-g-l-y d-u-c-k-l-i-n-g”) is being sold to another foreign parent. That can only make Hesse regulators yet more restive on a weekend when Deutsche Bank announced it is raising enough cash to run a modest African nation to plug the gaps in the gaps of the gaps of its balance sheet (I wonder is there a derivatives book inside DB monitoring the gamma of the holes?). If LSE hadn’t achieved a new personal best in merger toy pram throwing last week, the deal anyway would be throttled to death from Germany – hoist by its own HQ.

Public Markets

Deutsche Boerse Unit EEX Says Takes Over US Peer Nodal
Reuters

PLY: Another excellent move by EEX which has continued to move forward while much else at DB1 has been paralysed by the merger of equal desperation for over a year. The acquisition of Nodal gets EEX into the USA and at an undisclosed (but low three figure million USD price) ought to be capable of considerable accretion given Nodal’s exchange and clearing capability. A very good deal by Peter Reitz and his team.

Recommended All-Share Merger Between LSE & DB1 – Publication Of Supplementary Prospectus
LSE
Deutsche Boerse Chairman Blames Britain For Failed LSE Tie-Up
Reuters

PLY: From a pointless publication of documents which represent nothing more than a waste of shareholder funds to a pointless remark where silence could be the more classy option.

London Financial Jewel Brightens Even As Brexit Reckoning Looms
Bloomberg

PLY: It’s funny how lots of people discuss the luck of LCH having a dominant position in swaps clearing. Well, luck is what you make of it and as i recall, then CEO David Hardy made the LCH very lucky indeed by pursuing services involving a multitude of nouns (led by “swap-” and “repo-” …all appended by clear) more than a decade before most everybody had any coherent stomach or impetus for such products.

Nowadays LCH is indeed a jewel thanks to that foresight of David Hardy. However nowadays the jewel has an IT system which is, alas, rough and uncut.

LSE On The Rebound
Bloomberg

PLY: Is Xavier really as clearly back in the saddle as his agitprop is informing the broadly supine London media? This article makes a clear point that the LSE multiple does rather run in advance of the European exchange peer group… I’m not calling it “Xav’s Ponzi scheme” but a lot of folks out there in the dealing world often do (and the bankers losing the chance to swallow a success fee doubtless are). Digestion is required, making multiple frothing tricky.

Hong Kong Stock Exchange’s Focus On Turnover Does Investors No Favours
South China Morning Post

PLY: Article also notes CEO Charles Li was paid 5.7 million USD (44.05 million HKD) in compensation last year.

China To Propose Reforms Amid Signs Of A More Resilient Market
TODAYonline

BSE Shares Down 17% Since Listing
Livemint

LJSE Launching Trading Platform For Non-Listed Companies
STA – Slovenska Tiskovna Agencija (subscription)

PLY: Good luck to the Ljubljana Stock Exchange team as they launch their SME MTF, SI ENTER today.

Brokers Want ASX Blockchain To Do More
The Australian Financial Review

PLY: As expected, the ASX’s ledger doesn’t do what the users want but it certainly costs enough that it ought to deliver comprehensive wonderment. The user comment has been published and it shows a mismatch in what users want and what ASX provides at an inflated price. “Plus ca change…” users habitually shrug over a splendid cappuccino in the finest coffee bars of the CBD.

FXCM.Com Removes All Mention Of Non Dealing Desk Model
FinanceFeeds (blog)

PLY: The summary lifetime bans of the senior management and general defenestration of this dubious enterprise by the CFTC seems to have focussed the webmaster’s mind to remove that highly incriminating “dealing desk / no prop trading” reference from the web site.

FXCM Shareholder Alert: The Law Offices Of Vincent Wong Notifies Investors Of A Suit.
Business Wire (press release)

PLY: Class action under way.

Stock Exchanges Across The World To Dedicate Ringing Bell Ceremonies To Gender Equality
Business Today

Cursed Affair: How the Merger of Equal Desperation Unravelled*
Financial Times

*Headline amended by PLY.

PLY: Nothing really new here but the FT Weekend’s attempt to draw a line under the affair, noting the blamestorming of all parties including the embitterment of XavRol at the UK’s historic No vote to the EU. The latter lack of awareness only reiterates the ivory tower problem afflicting Xavier for some years. Nobody dared to question any of his utterances, to the point where his own intuition was entirely obsolete, driven within a Cameroonian world view which didn’t reflect the local mood.

It is at the same time amusing to see so many folks suddenly rushing out to say they always thought this ‘merger’ was a bad idea…when they were nowhere to be seen at the time when a few of us were clear in our engagement against this ill-conceived deal.

Broken Engagement At The LSE Is Bad For The UK
Financial Times

If the public had a better understanding of how the London Stock Exchange ‘s business works, its proposed merger with Germany’s Deutsche Börse …

PLY: …If the FT had a better understanding of how the EU works, they would not be so blindly convinced it retains European’s confidence. What a simply misguided article.

Amidst that smug aura of delusion which permeates too much of the FT, the myopic Euro fanboys and girls presumably now want to push any sale of British assets to EU holders to as to maintain the SS EuroTitanic that little while longer before more icebergs rise up and attack the already damaged hull.

Private Markets

IPO Update : CDSL
Indiainfoline

PLY: Fascinating news as the CSD of Bombay and Calcutta exchanges is draft filing for an IPO in the wake of BSE’s own successful listing. Estimates of value around 400 crore Rupees (circa $60 million USD).

PSX Receives Payment For 40 Percent Stake From Chinese Consortium
Geo News, Pakistan

Asean Exchanges To Promote Capital Markets Growth In SE Asia
Jakarta Globe
Heads Of South Asian Exchanges Call For Integration
nation.lk – The Nation Newspaper

Sri Lanka Stock Exchange Ready To Sell Soe Stakes
EconomyNext

Sri Lanka’s Colombo Stock Exchange has introduced a facility to sell large stakes in companies as single blocks (“All Or None”) which can be used to sell off state enterprises.

PLY: Great idea.

Plato Partnership Announces 15 New Partners
MondoVisione

Jamaica Stock Exchange Joins Cenuk To Provide Capacity Building For Smes Wanting To List
Jamaica Observer Mobile

The Small Business Association of Jamaica (SBAJ), which represents businesses that have an income turnover not exceeding US$5 million per annum, has teamed up with the Jamaica Stock Exchange (JSE) and Caribbean Enterprise Network (CENUK) to expedite the process by which small businesses can prepare for listing on the Exchange.

Nigerian Commodity Exchange : Lead Capital Consortium Emerges Winners
THISDAY Newspapers

PLY: Congratulations on winning the mandate and good luck to Lead Capital Consortium building the Nigerian Commodity Exchange.

Croatia’s CROPEX Joins Western Balkan 6 Electricity Market Integration Initiative
SeeNews

Special Section: FTI, NSEL, India at the Crossroads

Nada news today.

Technology

What Happened On The Day Snapchat Became A Serious Company
Mashable

PLY: “Years ago we took Polaroid public, and today we’re going to make history with Snap” commented the first NYSE Chairman to use Snapchat . (I’m sorry I missed the Snapbot in situ vending the groovy glasses at NYSE, as I doubt any of those machines will make it to Malta anytime soon…). Plaudits to NYSE on a supersmooth IPO.

Products

CME, Thomson Reuters Step Down From Providing London Silver Benchmark
Reuters

PLY: Remarkable: CME/TR handing back the keys to the licence years early. It’s not clear what happened here but it does seem odd.

Bombay Stock Exchange Hikes Annual Fee For Listed Firms For Fy18
The New Indian Express

Dubai Financial Market Launches First-Of-Its Kind Regional ETF Trading Platform – Platform Falls Under New Regulatory Framework And Adheres To Global Best Practices

Diamantaires Ready To Trade On Icex Platform
Times of India

The mock tests for diamond delivery process being conducted by Indian Commodity Exchange Limited (ICEX) have been running successfully.

The EU Is Reforming Carbon Trading , But Does It Go Far Enough?
Care2.com

Deutsche Börse AG Launches Trading Of Money Market Funds With Shorter Settlement Period Of T+1 – Five BlackRock Institutional Cash Series Plc Money Market Funds Are Tradable On Xetra
MondoVisione

Career Paths

PLY: I was deeply saddened to hear of the demise of Clayton Yeutter, Former Us Secretary Of Agriculture And Native Nebraskan, at age 86. A one-time CME CEO & President and regular visitor to the early Burgenstock meetings, his was a charming presence, helping the early derivatives revolution immensely post Nixonian deregulation, before Mr Yeutter moved to government (and Republican party high office) under Presidents Ronald Reagan and George HW Bush.

Similarly, it is a shame to hear of the sudden death of electronic trading pioneer Neil DeSena.

Global Alternatives, an owner-operator of crowdfunding for alternative investments, has announced the appointment of Brendan Bradley as Non-Executive Chairman as it prepares to launch Prop-X, a cross-border property trading exchange.

All securities originated by Global Alternatives’ Property Crowd platform will be listed on the exchange, along with private equity and debt issues backed by investment grade, global real estate assets from the institutional sector. This will offer investors the real-time liquidity of an exchange order book.

PLY: Delighted to see another role for Brendan and it is interesting to see another marketplace in the property sector.

Crowdfunding

Mum Ditches Disney World Crowdfund Appeal For Daughters After Getting Abuse
Metro

PLY: The wisdom of crowds…more clear evidence of coherent due diligence amongst retail participants in crowdfunding.

Other Stories

The Goldilocks Problem: How to Get Incentives and Default Waterfalls “Just Right”
Chicago Fed

PLY An inspired paper by John McPartland and Rebecca Lewis – today’s “must read.”

Here’s to another wonderful week in the parish, have fun and thanks for reading Exchange Invest.

Patrick

Patrick L Young
Executive Director DV Advisors

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