May 10 2016

elb2Brendan Bradley the latest to leave DB1 as the exchange moves towards being…well I am not sure what? Just another investment bank, with a different licence? Brendan is a (no doubt temporary) loss to the parish as one of the keenest minds in product development and a proper fintech pioneer with a pedigree (aka dating back to the last millennium, not just another arriviste carpetbagger) in the space. Elsewhere, an LSE typo leads me to wonder what the massed regiment of Paternoster Square PRs are actually achieving while the Swiss are already showing how post EU Brexit may work in some minutiae at least… Lots of pith, happy scrolling:

The latest Premium content discusses the tech world’s slight frenzy about Palantir once the unicorn hunters showed off some email swag. NASDAQ was mentioned – save yourself the time & read this Premium Brief instead: Palantir & NASDAQ.

Meanwhile in Bigworld: ruthless extraction without total context means news of there being an Irish government after a 70 day coalition cobble includes this gem from the Irish Examiner “Finance Minister Michael Noonan will now work with Michael Fitzmaurice to hammer out an agreement on turf-cutting and bogs.” White heat of technology & all that: Dublin IS a digital hub…with aromatic winter heating, clearly.

Public Markets

Bats Q1 2016 Earnings Call Transcript

Bats

PLY: We came, We Saw, We Listed…oh and delivered good numbers too…

 

TMX Q1 2016 Results

TMX

vs Q1 2015: revenue CAD 177.7m (USD 136.7m), down 4%, income from operations CAD 69.7m (USD 53.6m), up 4%, net income CAD 46.3m (USD 35.6m), up 9%.

PLY: I see RBC euphemistically referring to TMX as “fully valued” this morning. How very Canadian. “A Bit Lost” is perhaps a better phrase. In Canada’s brave new world of Trudeauist largesse, I just don’t see any coherence to what TMX wants to be, while the competitors are apparently roaming around Bay Street unchecked:

Battle Lines Drawn As Nasdaq Readies Canadian ‘Dark Pool’ Plan (subscription)

The Globe and Mail

Nasdaq is confident it can make a dent in Canada’s “dark pool” stock trading market, but its biggest competitor has criticized its plans.

 

Lending Club Q1 2016 Results, Chairman & CEO Renaud Laplanche Resigns

Lending Club

vs Q1 2015: Adjusted EBITDA $25.2m, up 137%, net income $4.1m, compared to a loss of $6.4m.

PLY: The big news was the ousting of the Founder over some curious securitisation process:

LendingClub: When The Disrupter Gets Disrupted (subscription)

Aaron Back – Wall Street Journal

LendingClub CEO Fired Over Faulty Loans (subscription)

Peter Rudegeair – Wall Street Journal

Like other P2P loan platforms looking to disrupt traditional banking, LendingClub needs the trust of lenders to survive. That is why questions around the sale of a relatively small batch of loans in the first quarter have now become deadly serious for the company.

 

Swiss Dark Pool Loophole An Intriguing Signal On Post-Brexit Regulation (subscription)

Tim Cave – Financial News

Deep in the small print of new Swiss financial services law is a sign that regulation in a post-Brexit UK might be more accommodating than many experts believe.

PLY: In other news, the remain campaign’s latest scaremongering suggests that millions of UK residents will lose their rights to communion. Well, Rome is in the EU so how can any Catholic devotees expect to receive full religious affiliation if Britain leaves? (BTW if Britain were to vote leave, the government adds, this will create global warming, a new world war…maybe a couple, not to mention fire, famine pestilence & flood leaving Britain a wasteland where Mad Max style libertarian renegades like me will be running new BMWs across state lines to eager British buyers now frozen out of commerce which generates a 50 billion a month advantage to the continent! – I hate to say it but with a campaign like this, how did Dave’s ‘nice but dim’ corporate socialists ever get into government in the first place? – Aha! I just googled the British ‘opposition’ party… PS Not sure the actual remain campaign is much cop either).

 

UK FCA’s Regulatory Sandbox Opens To Applications

MondoVisione

PLY: Get your towels down early to enjoy your place in the sandbox, clearly.

Private Markets

Asian Commodity Exchanges Look To Broaden Their Horizons At Home & Abroad (subscription)

Metal Bulletin

Commodity exchanges in China and Singapore are looking to increase their national, regional and international influence.

 

IDX Changes Tick Size

Jakarta Globe

New rule limits price movement to up to ten times of the stock’s respective tick size in a trading day, down from 20 times in the previous rule.

 

Tanzania: TCX Ready for Rollout Next July

allAfrica

Tanzania Mercantile Exchange (TCX) is set to start operations in the next fiscal year after tackling some issues related to warehouse receipt. TCX is expected to start with cashew nut whose marketing season is between September and January. The cash crop was chosen, thanks to its warehouse receipt system already being in place.

Dividend News

TMX declared a dividend of $0.40, payable on June 10, 2016, record date May 27, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL both small off.

Technology

Industry Collaboration Is Necessary For The Successful Application Of Blockchain In Securities Markets – New Academic Research From The SWIFT Institute Reviews The Impact & Potential For Blockchain In Securities Settlement

MondoVisione

Distributed Ledgers, Centralised Logic & Competition (subscription)

FT Alphaville

Blockchain fever has, as we all know, turned into private permissioned distributed ledger fever — loosely summarised as the idea that the advantages of blockchain can be stripped out of the only tried and tested blockchain (bitcoin) then applied to pre-existing token framework (a.k.a fiat money), without the need for costly proof of work verification mechanisms.

PLY: The good news is that SWIFT, as they seek to ignore any issues on their part arising from the alleged “inside job” Bangladesh Bank heist, manage to shamelessly promote their own self interest – despite the fact that the whole reason we got excited about Blockchain in the first place was precisely because many of us believed SWIFT redefined the fetidly archaic in the first place. Organisations with no reason to exist sending out releases justifying their entirely nebulous existence deliver only pure irony failure – without any humour.

Oh and I would say 36 months before most of the great cooperative Blockchain consensus fades in a mire of apathy, lack of participant bonus payments and indeed probably looming antitrust attacks on some..

Products

Derivatives Traders Adopt Rules to Clear European Credit Indexes

Katie Linsell – Bloomberg

Mandatory clearing in Europe will be phased in over three years, starting with the biggest traders in February. The rules will apply to five-year, euro-denominated contracts on Series 17 and above of the Markit iTraxx Europe index and Markit iTraxx Crossover Index. The investment-grade and high-yield measures of CDS which are updated every six months, are currently on Series 25.

 

LSE Derivatives Market Launches FTSE 100 Weekly Options

LSE

LSEDM announces the launch of weekly options based on the FTSE 100 Index from 31 May 2016.*

FAO: Well at least we think they mean 2016, QV LSE website screenshot below suggesting 2106:

LSE 2106 - 2

PLY: Allegedly London commuters cannot get a seat on the tube before St Paul’s nowadays because whole carriages are taken up with the commuting PRs heading into Paternoster Square to, er, ‘manage’ the message about the merger of the week/month/year/century – or whenever some sensible antitrust folks kill it stone dead in the – compelling – bite of a Twix. It seems somebody mixed up the draft parchments when checking the website today. A dumb typo gives rise to fears of manifest incompetence around at LSE – it’s that old shoe/fear/battle lost index thing. I suppose the upside might be it suggests a failing of any accusations of micromanagement previously levelled from multiple parties. Such silly schoolboy errors, only leaves the LSE open to the many questions whizzing around the bars of the City of London where folks ponder just how integrated the previous deals really are and whether there is a management seeking to develop the business… or just a group seeking to cash in?

BTW, weekly options – nice idea and we came to praise them but alas the LSE messaging system failure…

 

Euronext Launches Its First Nitrogen Fertiliser Futures Contract

Euronext

Euronext will launch in autumn 2016 the first physically-deliverable futures contract for nitrogen solution, aimed at the European market.

PLY: Good idea. We’re gearing up for Euronext results on 12th…

 

Primary Dealers & HFTs Fight It Out In $13tn Treasury Market (subscription)

Financial Times

Primary dealers wary of greater transparency while HFTs eye lower trading costs.

 

SR Labs Launches New Superfeed Compressed Data Feed – Data Compression Delivers Market Data Access Flexibility

MondoVisione

 

IOSCO Issues Report On Impact Of Storage & Delivery Infrastructure On Commodity Derivatives Market Pricing

MondoVisione

Career Paths

FOW led the charge reporting that EUREX Chief Innovation Officer Brendan Bradley has left the company after a 10 year stint which previously involved being Global Head of Product Strategy.

PLY: It was Brendan who derived that coolest of job titles in the parish “Chief Innovation Officer” and moreover, unlike various jobsworth pen pushers who have subsequently devalued the title in other, ahem ‘organisations,’ he remains one of the clearest forward thinkers in the industry whose understanding of the dynamics have been cannily accurate for more than 2 decades. For those neophytes who think fintech a modern thing, I only wish we had had a GoPro in the mid 1990’s recording our conversations when it was clear Brendan had the electronic trading zeitgeist ahead of virtually everybody else in London. That he has departed DB1 is, I fear, another clear sign to be concerned that the new management are more self-interested in total control as opposed to rebuilding DB1 to be a world class entity which reflects its many great assets (staff included). The current outlook for DB1 is highly binary. A very precarious equilibrium endangered by management insistence on continuing on their current replay of the bad day at Brussels antitrust movie which they first made in  2012. Instead of suggesting a new vogue of open dynamic management, DB1 looks more than ever dangerously incapable of thinking outside the box – and has just lost its best lateral thinker. That is profoundly worrying given the absence of competence in the latest DB1 approach to buying LSE. #ExchangesAreNotInvestmentBanks

For Brendan, I can see many great opportunities ahead given that he is one of the very few adults amongst many breathlessly bereft of perspective arrivistes on the London FinTech scene.

Bloomberg reports that LendingClub founder & CEO Renaud Laplanche and other senior managers departed after an internal review found abuses tied to the sale of a loan and a failure to disclose a personal interest in an investment fund. Hans Morris is the newly named Executive Chairman, while Scott Sanborn was named acting CEO.

Reuters reports that Gordon Neilly, Co-CEO of Cantor Fitzgerald Europe, has resigned from the investment bank with effect from May 6. Neilly, who joined the investment bank in 2012, was appointed Co-CEO of Cantor Fitzgerald Europe in 2014 alongside Angelo Sofocleous, who will remain in his position as sole CEO.

Lombard Risk Management appointed Mike Payne to the role of CTO.

Financial Calendar

11.05 – DB1 AGM 2016

12.05 – Euronext AGM 2016 & Q1 2016 Results

12.05 – Oslo Børs VPS Holding ASA AGM

13.05 – ICE AGM  

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

Analyst Notes

ICE Price Objective Lifted By Argus From $270.00 To $290.00 – “Buy” Rating

Deutsche Bank Assumed Coverage On ICE – “Buy” Rating, $295.00 Price Target

LSE “Outperform” Rating Reissued By BNP Paribas – GBX 2,750 Price Target

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

Other stories

DTCC Signs MoU With Korea Exchange
Finextra

…to cooperate with each other on a Trade Repository (TR) solution in Korea.

 

Bitcoin Isn’t the Answer to Central Bank Woes

Leonid Bershidsky – Bloomberg

Here’s a utopian image (or perhaps dystopian, depending on the point of view) to ponder: Central banks have switched from issuing money in the form of cash to releasing digital currency and registering transactions on a distributed ledger along the lines of the Bitcoin blockchain. Because it doesn’t require much of an up-front investment — the clearance and transaction recording system is decentralized — the central bank is now able to do something it has never done, namely accept deposits from private citizens, providing an ultimate safe haven for their savings and making private banks, with their fractional reserves and the danger of runs, largely unnecessary.

PLY: Problem is the Bitcoin / Blockchain paradigm was created to avoid the innate incompetence of the arrogant central banking (sic) elite – thus central bank issued Blockchain cash is illogical on the chocolate teapot scale of common sense.

 

Madoff Sons’ Fight Over Cash Endures Long After Their Deaths

Erik Larson – Bloomberg

Mark and Andrew Madoff died without resolving a 2009 lawsuit accusing them of squandering $150 million of investors’ money, and recent settlement talks with the estates have hit dead ends. Their ex-wives and other relations cut deals years ago. The brothers, who held senior roles at their father’s now-defunct securities business, had to have known about the fraud, trustee Irving Picard claims as he readies another bid to get the estates’ cash.

PLY: A curious quirk of the law. So Ken Lay got prosecuted but then ended up innocent of his Enroneous deeds as he died before sentencing and all appeals could be exhausted. Whereas these Madoff brothers can keep being pursued after the grave. I am minded to drive the conclusion of today’s Exchange Invest towards abstraction by pondering where this leaves the late Aubrey McClendon?

 

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