MAY 15 2017

Good Morning and welcome to a whole new week! Viewed through the lens of Exchange Invest issues, it’s 994 which in Porsche terminology relates to the original design number for what later became the 964 Turbo (part of the 3rd generation 911 series). Fabulous machine.

Prosperity UK Video

Prosperity UK Panel – Brexit, Euro Clearing & Financial Market Structure: panel ably chaired by Barney Reynolds headlining parish luminaries Jeff Sprecher and Michael Spencer, with one Patrick L Young lurking in the background – perhaps the ‘hot button’ parish topic in derivatives of the moment…

In Today’s Exchange Invest

NEX profits grow significantly at the newly repurposed post ICAP Michael Spencer vehicle as parish veteran Anna Ewing is an excellent addition to the NEX board. Former BIST staff imprisoned en masse in latest Turkish political crackdown while IEX appear to be percolating data fees and Pakistan is preparing to IPO, selling 20% of its equity.

Oh, and it’s Exchange Invest’s 4th birthday…yip happy birthday to the parish equivalent of the cell phone – something many once scoffed at but now it seems the progressive figures in the industry find it hard to live without.

And there’s more, happy scrolling:

In BigWorld

Who needs BigWorld (hey it’s all like Trump ‘yada yada’ – because he sacked the man the Democrats hated even more than POTUS while in Britain the excitement is how many pages the Labour Party’s suicide note, er, manifesto, will contain tomorrow – leaks suggest the content is straight back to something Leonid Brezhnev may have regarded as a teeny bit left wing, Angela Merkel is staging an electoral comeback and President Macron has been signed in to be placeholder until Le Pen likely wins in 2022…workaday stuff really).

…So, let’s do something happier and celebrate the fourth official birthday of this modest daily paean to markets. Yip, Exchange Invest is ready for kindergarten (cue limp reader quips from some quarters)! Seriously, when I started the original beta tests of this newsletter something over 4 years ago I appreciated the candid feedback of the test group and from that I began fashioning what I am now reliably informed is the must read amongst the progressives in the C-suite of the industry. What began as a brief for investors maintains that original strong buy side readership along with a vast number of venues in all areas of the market structure globally (across some 120 countries worldwide) daily.

So thank you one and all for your readership. Thanks too for writing in too. My inbox remains a delightful mix of judicious criticism, praise and insights – I appreciate all the mail, yes, even the occasional frenzied missive which seems to infer a degree of biological illiteracy on the part of the sender!

By now I think the key metric established by myself is that, as unconventional digital media on the analytical spectrum of review, Exchange Invest does speak truth to power…and this draws mixed results with the extreme form of the cycle going:

Exchange Invest calls folks out (sometimes I am wrong, sometimes they are but we all pull through and see the light of a better day…) and they get their acts together / communicate better and / or we all move forward…

Or: Exchange Invest calls folks out and they have all manner of tantrums…

Getting through point one may take a bit of time for some folk but the results have always been encouraging…whereas those stuck in point 2…well so far the pattern has been a clear one: they don’t survive much longer in the parish without either mending their ways or departing.

The folks in category two have proven a huge disappointment to may parishioners but it’s usually a relatively short-lived self-imposed purdah period on the part of the management folks whose egos have not been pandered to by my pith. (Those who offer commercial deals only to withdraw them on some justified critical foresight are by the by beneath contempt – “my word is my bond” was started in this parish after all).

Exchange Invest has always engaged in the parish with good intent – I want to praise but cannot be expected to avoid calling out anything which doesn’t make for a better market. Moreover, it is fair to say that my analyses proved a lot more presciently accurate than most: often a year or more before the situation was resolved… (in a spirit of forgiveness I’ll spare the blushes of those who had to endure my wrath – that’s ancient history now).

As anybody who has gone a full cycle with this newsletter will know, I change my opinions often – “as the facts change” as JM Keynes said). Nevertheless I just don’t do “run with the hare and hunt with the hounds” as either a personal credo or a long-term plausible business model. I realise that shocked (still shocks) some folks on the way through who mix up their own comments with one of the gospels (and hear I mean gospels way beyond the reach of our modest parish).

On that ever-flexible note, Exchange Invest enters its 5th year and I can guarantee two things: More of the same pith and insight…and look out for some exciting new developments soon!

Thanks in particular to all of you who have contributed to the production of Exchange Invest with insights and in particular, money, without you it would have cost me a great deal more to provide all this pith to the community!

Have a great day.

Public Markets

NEX Group Full-Year Results For Y/E 31 March 2017

PLY: Lovely way to kick off our 4th birthday: NEX shows sound incremental growth in revenue and profit as it begins the new journey. There are vast opportunities ahead. Exciting times for Michael Spencer and his team!

Brazil’s B3 Books Lower Profit On Merger Costs, Issues 2017 Outlook
B3 Announces Results For The First Quarter Of 2017

Mnuchin Said To Start Review That Could Ease Volcker Rule’s Bite

The EU Ponders Moving Euro Clearing From London After Brexit
The Economist

PLY: Fluffy in parts mainly because The Economist is in denial about Brexit but at least sensibly quotes Barney Reynolds on what is now distilled as the 7% number from LCH sources…

How London Stock Exchange Has Kept International Allure After Brexit Vote

PLY: Essentially the LSE seeks plaudits for maintaining its “allure” despite what were unforced, self-inflicted errors: seeking to sell itself to DB1 despite it being absolutely crystal clear to those with objective judgement that they could never get it through antitrust, and then joining that failed Cameroonian coalition of chaos the “Project Fear” remain agenda… On neither point do we have an executive apology for the waste of time, money and direction but now we ought to rejoice because their relative monopoly position proves robust. Pass the sick bag, please.

LME Asia Week 2017: QME Launch On Hold Until Trading Platforms Crackdown Finishes In Mainland (subscription)

Don’t Buy The VIX — Buy The VIX’s Owner Instead

PLY: Brutal Steven Sears sub head: “Remember: Wall Street is a place where smart people think of ways to take money from dumb people.” I think he may be mixing the collective term “Wall Street” up with the more specific genus of investment bankers?

WSE Management Board Proposal Regarding Proposed Distribution Of 2016 Profit

PLY: Further proof the GPW has both lost its will to be anything more than be a cash cow for its minority stake holding but majority voting, shareholder, the Polish government. Over 70% of the 2016 profits proposed as a dividend. Poland and CEE is desperate for investment and all the Warsaw Stock Exchange can do is pass money back to shareholders – a good example of a bankrupt management culture methinks.*

*At which point there is a fair question to be raised: does the GPW have any management left? (IT / daily operations excepted).

Stock Exchange Head Rolet In £2M Share Sale
The Times (subscription)

PLY: The Times of London reports what Exchange Invest readers already knew several days prior: LSE is buying its stock vigorously while XavRol was selling.

Jamaica Stock Exchange Limited Unaudited Q1 Financial Statements
Jamaica Stock Exchange

SGX, Get The IPO Party Going Again For Small Investors
The Straits Times

Bursa Malaysia, Shanghai Stock Exchange Ink MOU To Further Strengthen Cooperation
New Straits Times Online

Private Markets

IEX May Shift Business Model To Charge Customers Fees
NY Post

PLY: Will IEX charge data fees?

Govt Monitoring Progress On NSE’s Listing Plan

PLY: I hadn’t really thought it was the government’s decision to make per se?

PSX To Sell 160.295Mln Shares Through Book Building In June
The News International

KARACHI: The Pakistan Stock Exchange (PSX) will offer 20 percent of the total equity in the offering, having previously sold a 40% stake to a consortium, comprising China Financial Futures Exchange Company Limited, Shanghai Stock Exchange, Shenzhen Stock Exchange and two local financial institutions, Pak-China Investment Company Limited and Habib Bank Limited.

Police Detain Dozens Of Former Bourse Staff Over Gülen Links
Hurriyet Daily News

PLY: It is not clear who the more than 50 staff detained are, nor who was being sought amongst the 4 deemed to be overseas but this is clearly a very very worrying development for parishioners and the Turkish state.

Will The Calcutta Stock Exchange Survive?

PLY: As an example of the overarching feudalist approach to a central market structure under its suzerainty, the SEBI pogrom on regional exchanges probably cannot be improved upon, even from their serial manipulations where they ought to enable and strengthen the invisible hand as opposed to prescribing their quasi-marxist whim on what needs to be a free market.

Announcement On Publishing Business Rules Of Shanghai International Energy Exchange For Crude Oil Futures

PLY: A new subsidiary of Shanghai Futures Exchange gains regulatory approval.

Special Section: FTI, NSEL, India at the Crossroads

Cleaning The Augean Stables
Hindu Business Line

“Similarly, the CBI has found that NSEL promoter Jignesh Shah has floated nine shell companies and diverted proceeds from NSEL to these firms. Why do investigations and court proceedings linger? Does the judiciary not have a soul?”


BSE Selects IBM For Setting Up Its Security Operation Center

Traders’ Furious Land War Erupts Outside CME’s Data Center
Crain’s Chicago Business

PLY: Jump trading buys 31 acres outside CME’s data centre for $31 million, or twice the going rate for the land, to seek a microscopic latency advantage. As I first said years ago, nowadays the kids of Scooby Doo would have installed a low latency aerial and instead of solving mysteries, spend their days in the van parked outside exchange data centres squeezing a zillionth of a second out of the round trip time.

To which end my free tip for the low latency folks is consider investing in food trucks: they usually have the right to park very close to data centres and you can even get some of your investment back through burger flipping in slightly higher latency than your futures trades.

Mobile Startup Draft Bought By Betfair For $48 Million (registration) (blog)

PLY: A daily fantasy sports play by Betfair as the US marketplace looks to the next phase of development – albeit there remains a cloud of previous legal challenges.

Citi Joins Axoni’s Financing Round, Total Raised $20M
FTSE Global Markets

Citi joins a noteworthy group of Series A investors, including Wells Fargo, and NEX funding the DL company.


Solactive Launches USD Investment Grade Corporate Index – New Benchmark Targeting Investment Grade Corporate Bonds Issued In USD

Career Paths

PLY: I am delighted to report that the versatile Anna Ewing has been appointed to the board of NEX Group as a Non-Executive Director. A clear thinker, Anna retains a lively, open minded interest in market issues. It’s a delight to see her being given this role which ought to be entirely symbiotic for both parties – an excellent choice.

Exclusive Interview With BSE MD & CEO Ashish Chauhan
Economic Times
Face Of BSE, Chauhan Now Also The Face Of SAFE
Dalal Street Investment Journal

PLY: Good luck to Ashish Chauhan as Chairman of SAFE.


Crowdfunding To Be ‘Worth More Than Any One Charity By 2019’, Says Charles Wells
Third Sector

PLY: Seismic (even given the self-interest of the commentator) as overall the charity industry simply fails to appreciate just how unpopular it is in the likes of the UK let alone how incapable it is of meeting future challenges amongst all too many charitable ventures.

Other Stories

I think that’s just enough for today…
Onwards to another interesting week and thank you for reading Exchange Invest, despite being 4 years old I think we’ll eschew the jelly and ice cream from any light celebration today.

All the best,


Patrick L Young
Executive Director DV Advisors

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