May 04 2016

elb2In Bigworld, there’s one less lucifer in the race to the White House as Ted Cruz (finally) gets wiped out in the Indiana Primary. So expect more Dr Seuss in the Senate in future. Looks increasingly like the US Presidential election will be a race between a pair of candidates where one is materially incompetent and entitled, the other is materially entitled and arrogant beyond belief. (Once I have worked out which epithet applies to which nominee, I will let you know).

Meanwhile if seeing me in video action is of interest, there’s yet another interview with yours truly, this time discussing Iran, Saudi Arabia & the substance formerly known as black gold with Katie Pilbeam at News.Markets…

In the exchange parish, there is a new slant of cant from CarCrash as he tries to make us believe he really has got the talent we were once led to believe but has not been apparent since God enabled his impetuous rush into the shotgun takeover bid for LSE. It is another rather unconvincing effort, seemingly demonstrating how little CK1 understood the parish when he joined it. Hopefully he is learning now but evidence of the latter remains sparse in public utterances. The sheer linearity and incapacity to see other perspectives from the C-suite of various institutions now surely leads us to question those organisations’ very coherence? It is worryingly close to the moment where they are not particularly fit and proper on their own and don’t evidence any (sic) compelling rationale for being merged – unless they are to come under what amounts to more adult supervision. There needs to be a reboot – I’ll get back to this in Premium. It is a very very vexing and worrying point with ramifications for all of us but there needs to be an outbreak of management and corporate governance to reset things away from hasty deals to a more coherent holistic approach to market operation and integration. So far, the protagonists, as evidenced by their being called out repeatedly by the takeover authorities for what could be regarded as elementary errors appear to be blindsided by the reputational damage they are self-inflicting. Trust is something that once lost can take ages and vast resources to rebuild.

Public Markets

DB1 CEO: LSE Plan Was Meant to Preempt U.S. Bid
Angela Cullen – Bloomberg

Carsten Kengeter said he embarked on a merger plan with LSE despite uncertainty about Britain’s future in the EU to preempt a potential U.S. suitor from pouncing on its U.K. peer.

“It’s widely known that LSE had aroused interest from the U.S.,” Kengeter said in a discussion in Frankfurt late on Tuesday. “This interest would have become more concrete within a short space of time. As a result, waiting off was not an option for us, although it would have saved us a lot of questions.”

The rationale for combining the operators of the Frankfurt and London exchanges holds up regardless of the outcome of the U.K. June 23 referendum on EU membership, said Kengeter. It’s still possible that an interloper makes an approach for LSE, he said.

PLY: I don’t play poker, presumably Mr Kengeter doesn’t either. However the whacky notion that the upper echelons of investment banking have been so long used to getting their way is revealed by this latest attempt to justify a deal which has been ill-considered strategically from the public perspective. If only somebody had the nerve to take the spade away from such C-suiters with a penchant for repeated digging.

CEO: DB1 To Keep Frankfurt Focus After LSE Merger


Carsten Kengeter: DB1 aims to keep its derivatives trading & settlement operations in Frankfurt after its planned merger with LSE. The group that would result from the merger will need a mainstay in the euro zone.

“That’s why Eurex Clearing and Clearstream Banking Frankfurt will remain central structures and always stay there,” Kengeter said.

PLY: “Plus ca change plus c’est la meme, why bother?”

Wobbles Could Topple The LSE

Alex Brummer – Daily Mail

The least one might have expected from a putative CEO of a ‘merger of equals’ of DB1 & LSE is an understanding of the rules governing takeovers in the City of London.

QV Premium: DB1-LSE Merger Brief.

PLY: Alex Brummer outlines the thesis here concentrated on CarCrash, suggesting he needs a primer in the Takeover Code. This follows in the wake of the ‘clarifications’ which felt more like ‘cloudifications’ from XavRol. It is simply bizarre to have the supposed fair, informed managers of free market operations incapable of enunciating or following a rule book. The Daily Mail has been complaining about the silence of the shareholders but once again, beyond the Takeover panel’s interventions, frankly all regulators ought to be having a fit here! Surely the FCA has noticed London is being brought perilously close to disrepute and, gosh, somewhere between Wimbledon and Frankfurt, we have a German who doesn’t know his rules? I mean that goes against everything corporate Germany is founded upon: where they have the rules learnt by rote long before they even ponder a notion of customer service 101. (I suppose one could argue here DB1 is as atypically German as, say Lufthansa is the ‘customer oblivious’ rule following benchmark of corporate Germany whereas DB1 have customer service but apparently the rules are proving a struggle).

There needs to be a clearing of the air over past inadequacies and a massive amount of improvement in management messaging – and that is more than slithering out a few elisions at 6 pm Friday on a long weekend. The sad news is, I said this all a month ago and since then things have not materially improved. Perhaps somebody can make a brave start by at least removing the shovel from the hands of ‘managers’ intent on digging at all costs?


LSEG – Total Voting Rights



ICE Rule 2.10 Announcement



ESMA Publishes Responses To The DP On Draft RTS & ITS Under SFTR


CBOE To Open International Office In London (subscription)


CBOE plans to open in July a London office, the exchange group’s first base outside of the US.

PLY: Further to my remarks yesterday, a welcome development which hopefully means CBOE will be getting their message across better outside of Chicago.

Private Markets

IFCI To Exit NSE; Board Approves Selling 3.05% Stake

The Economic Times

IFCI’s board approved selling its remaining 3.05% stake in the National SE (NSE), having been reducing its stake for some time.

PLY: Wonder who will bid? DB1 is close to BSE already but with a possible 15% limit in stockholding nowadays for foreigners, there ought to be a lot of interest amongst funds and abroad. I have long liked NSE as a business having done comprehensive Due Diligence on them in the past.

QV Premium: Exchange Deals Brief 2 and India – NSE Sales Brief.


Saudi SE To Name IPO Advisers Within Days

Deema Almashabi – Bloomberg

CEO, Khalid Abdullah Al Hussan: Tadawul is poised to appoint banks to manage its IPO and will make an announcement within a few days.


Saudi Arabia’s Capital Market Authority Approves Amendments To The Registration Requirements For Qualified Foreign Financial Institutions, Change The Settlement Cycle For Securities Transactions & The Introduction Of Securities Lending & Covered Short-Selling

PLY: The impact of plummeting oil prices appears to be better markets in Saudi – good to see.


NSE To Launch New Exchange For MSMEs

Business Standard

India’s National SE is planning to launch a new trading platform for bill discounting or trade receivables of micro, small and medium enterprises (MSME). NSE has forged a jv with the Small Industries Development Bank of India (Sidbi) for the new platform, which is likely to go live by the end of this calendar year.

PLY: Good idea – receivables and suchlike are a huge opportunity everywhere.

Dividend News

HKEX – Forfeiture of Unclaimed Final Dividend for 2009


Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL off 1%.


Cinnober Q1 2016 Results

Finance Magnates

vs Q1 2015: net sales of SEK 76.3m ($9.63m), up 12%, operating profit 1.1m SEK ($137k).

PLY: Good news from Cinnober once again, glad to see they are prospering and with yesterday’s stress test of European CCPs just one more step to higher standards, Cinnober is well placed in this and the exchange market with its real-time clearing software already revolutionising process in the likes of BM&F Bovespa and LME Clear.


ASIC- Innovation Hub: Regulatory Sandbox Proposal


Option Trading May Be Allowed In Selective Agri & Metals Initially

Rajesh Bhayani – Business Standard

MCX may be allowed to introduce options in 2 metals, while NCDEX could be allowed options in the 2 most liquid commodities.


China’s Accelerated Great Leap Forward Toward Gold Market Dominance

Ben-Kramer Miller – Seeking Alpha

London Starts To See The Shine In China’s Gold Plans


There appeared to be a changing tide of acceptance rather than concern over the past fortnight, that Shanghai is becoming a bigger, and more influential, cog in the global gold machine.

FAO: Last month China launched a yuan-denominated gold benchmark.

QV Premium: China Capital Markets Transformation Brief – Main File.


triResolve’s Repository Reconciliation service & DTCC Collaborate To Reconcile Data Reported To Asian Regulators



SGX Launches MSCI China Index Contracts


SGX launched its MSCI China Free Index (SM) futures & options contracts. The SGX MSCI China contracts have also been certified by CFTC.

Career Paths

The Boards of LME & LME Clear appointed Antony Stuart as an independent NED. Mr Stuart is a chartered accountant with 30 years’experience as an investment banker and corporate adviser. Before his retirement in 2011, he was MD at NM Rothschild. Mr Stuart replaces Nat le Roux, who has resigned as an independent director of both Boards, after some seven-and-a-half years as an LME Board member.

Asia Asset Management reports that Mirae Asset Global Investments (Hong Kong) has appointed David Quah, former VP of product development & marketing, cash trading & global markets division at HKEX, as its ETF team product specialist.

Tikehau Capital appointed Carine Lecadre-Perrier as Head of Group Compliance and a Member of the group’s Management Committee.

ISDA Issues Invitation To Tender For Determinations Committees Secretary Role

Financial Calendar

04.05 – ICE Q1 2016 Results

05.05 – Bats Q1 2016 Results

05.05 – ITG Q1 2016 Results 

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


SEC Adopts Amendments to Implement JOBS Act & FAST Act Changes for Exchange Act Registration Requirements


All JOBS Act mandates are now complete.


EC – CMU: Commission Supports Crowdfunding As Alternative Source Of Finance For Europe’s Start-Ups

PLY: Support for all forms of capital market structure for fundraising as part of a holistic CMU are welcome.

Other stories

Purdue, CME To Take Monthly ‘Barometer’ Of Confidence In Agricultural Economy


Purdue/CME Group Ag Economy Barometer, a monthly nationwide measure of the health of the U.S. agricultural economy.

PLY: Good idea.


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