May 17 2016

elb2Along the 3 year Exchange Invest journey, I have already deployed multiple metaphors and referenced a host of sources. Today it’s the turn of the 1930’s-1940’s project to create a broad gauge railway across, er, Greater Germany which springs to mind. One Mile Passing Loop is the first Premium post of the day while I begin highlighting the good and bad in the parish as part of our anniversary celebrations with: Winners & Losers Part 1 Last Year’s Laureates.

In the parish itself, it’s a rare day when I believe Michael Spencer gets something wrong but despite all my respect for his great abilities, I firmly believe he is mistaken about the DB1-LSE deal being either a good thing or lifting the City of London. Rather, given the way 2 quasi-SRO organisations at the head of the parish have already shown scant comprehension of the Takeover Code rules, I fear this deal is just an ill-considered idea with little or no merit and poorly executed without any coherent perspective. I know there’s a nirvana clearing element – but that’s the problem: it’s an end of rainbow gold pot repo and the counterparties, are de facto shady leprechauns.

Public Markets

MOEX Q1 2016 Results

MondoVisione

Operating income RUB 11.7 bln (USD 181m), down 1.1% YoY to; fee and commission income RUB 5.0 bln (USD 77m), up 32.2% YoY; EBITDA RUB 9.2 bln (USD 142m), down 2.6% YoY; Net profit RUB 7.0 bln (USD 108m), down 3.1% YoY.

PLY: Flat after a series of great results in recent times against the background of a difficult political scenario, sanctions etc. MOEX still demonstrates the power of a well run exchange group even in the face of adversity.

 

Sibex Q1 2016 Results

Sibex

Loss LEI 412677 (USD 104k), compared to 709731 in 2015.

PLY: Clearly BvB management must be objectively salivating at the ‘merger of equals’ prospect here with SIBEX…

 

Tullett Prebon – ICAP Deal – Second Supplementary Prospectus

Tullett Prebon

PLY: Updated data to show Q1 2016 financials, balance sheet etc.

Whatever Nex As Icap Is Renamed (subscription)

Alistair Osborne – The Times

Google Nex and look what tops the search list: “Nex, coming from the infernal word for ‘murder’ or ‘death’, is a powerful Zarosian general. She is a Zaryte from the planet Freneskae.”

No wonder Michael Spencer decided to rename (reported yesterday) the business he founded 30 years ago after her. What better than an avatar from RuneScape, a world combining “fantasy” and “different types of monsters” and not unlike that of inter-dealer broking…

QV Premium: Exchange Deals Brief.

PLY: Certainly better analogy than the other results which includes a gastric acid medicine but there are no ghastly faux pas like that infamous DB1-SwX j.v. “Scoach” which inferred structured products involved street slang assertions of stealing from folks with stealth… Meanwhile the hot rumour in the City is that Zarosians under the command of General Nex have managed to make cross border margin offset work but apparently only on the planet Freneskae.

 

Icap’s Spencer Says LSE Takeover ‘Will Lift The City’

Nick Goodway – Evening Standard

“I’ve been a supporter of this deal since the outset,” said Spencer, “We are building a London-based exchanges group which will compete on the world market. “It is a good thing for London and for Europe and a big debt of thanks should go to Xavier Rolet for helping to create it.”

QV Premium: DB1-LSE Merger Brief.

PLY: Dear Michael, I do respect you and you are by far the most dynamic entrepreneur in the City of London but here I fear I cannot agree – this is a bad deal on every level and the CCP benefits which I can appreciate you find alluring, are non-existent.

 

Citadel Buys Assets From Citigroup Speed-Trading Pioneer ATD

Annie Massa – Bloomberg

Citadel is acquiring the equity-trading operations of Citigroup’s Automated Trading Desk division, one of the pioneers of HFT. Terms of the deal weren’t disclosed in a statement released Monday. Citigroup acquired ATD for about $680 million in 2007.

PLY: Another bank exits US equity market making and the media suggests portents of doom for market structure. I would contend it’s a good thing. Indeed we could have a whole new age upon us. In one corner there would be brokers and in another separate companies making markets in stocks for the short term. I vote we call them ‘jobbers’ – it has a ring to it, no?

 

London Metals Hub Buckles As China & US Turn Up the Heat

Agnieszka De Sousa & Eddie Van Der Walt – Bloomberg

Traders are buying and selling more metal than they have in years on Chinese and American exchanges. In London, the heart of the global market for more than a century, it’s just the opposite. During the first four months of the year, futures trading on LME fell a combined 10% for its six main contracts, including copper and aluminum. That’s the worst start to a year since the data begins in 2006. While the LME remains the industry’s primary hub, its share of the global market slipped to 76% last year from 83% in 2012.

PLY: I get the fact that one must worry about market share and indeed LME has plans to maintain a modernisation of practices which some may see as a tad quaint. However, while this is a worrying shuffle and needs to be analysed as doubtless LME are doing, just consider for a moment how many equity markets dream of even having 50% market share once again, good grief 30% would be awesome for many…

 

JSE Launches Enterprise Development Programme To Drive Growth For Black Stock Broking Businesses

MondoVisione

JSE To Aid Emerging Black Brokers By Returning A Portion Of Trading Fees

BDLive

JSE will reimburse emerging black stock broking firms a third of their trading and membership fees every quarter. To qualify, brokers need to have a turnover of less R35m (USD 2.2m) a year and black ownership of greater than 50%.

 

Nasdaq – Proposed Senior Notes Offering

Nasdaq

PLY: NASDAQ deploying a shelf offering to raise some cash against the purchase of the ISE businesses from DB1.

Private Markets

BSE, NSE’s Huge Cash Pile Dwarfs Profits

Ashish Rukhaiyar – The Hindu

Bombay SE (BSE) and National SE (NSE) both sit on a huge pile of cash. According to the latest data, BSE boasts a cash/bank balance of Rs 1,610 crore (USD 241m) while NSE has a cash balance of Rs 1,191 crore (USD 178m) in the financial year ended March 31, 2016 (FY16).

BSE’s IPO Plans: How A Few Exchanges Fared After Listing

Deepak Kumar – Moneycontrol

Asia’s oldest stock exchange recently announced it will be hitting the primary market with an initial share sale. It has set the date for the public issue in December.

PLY: Weird random dart board pick hardly does anything for pure clarity but does at least deliver a start to a discussion – at the same time, the exchange parish has proven a highly profitable source of IPOs…

 

Pakistan SE In Share Sale Talks With Qatar, Istanbul Exchanges

Drazen Jorgic – Reuters

Pakistan SE, which is seeking a strategic foreign investor, has had “serious interest” from Turkey and Qatar exchanges, said Haroon Askari, the Pakistan bourse’s deputy MD.

PLY: As fast as the Viennese are withdrawing from their failed ‘Hapsbourse’ empire, the Ottoman Empire play is on with a vengeance at BIST, it seems.

 

China To Restrict Trading Halts, Boosting MSCI Odds

Bloomberg

Shanghai and Shenzhen stock exchanges will publish new rules on trading halts as early as next week, the China Securities Journal reported, a move that would raise the odds of the country’s stocks being included in MSCI Indexes.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Flat to small up for both MCX and FTIL. Given this is the third anniversary of Exchange Invest…I am minded to wonder which can last longer, this newsletter or the NSEL fiasco? Naturally, my money is always on the Indian blob…we’re not planning on going anywhere with Exchange Invest (the bids haven’t been remotely high enough) but their ability to leave things unresolved is quite unparalleled.

Technology

Aequitas Launches Fintech Solution – Enabling Access To Low Cost Actively-Managed Funds For All Canadians

MondoVisione

 

Sebi May Ask Stock Exchanges To Monitor Algorithm Trades

Jayshree P. Upadhyay – Livemint

Sebi may introduce steps such as speed bumps, order bunching of trades and order randomization.

Products

SEC, Treasury Push For Centralized Reporting Of Treasurys Trades (subscription)

Andrew Ackerman & Ryan Tracy – Wall Street Journal

Agencies move to create first-ever data feed the government could use to track such trades.

 

Statement on Trade Reporting in the U.S. Treasury Market

SEC

Exchanges Fight To Grab More Of Ever-Growing ETF Market

Ari I. Weinberg – Pensions & Investments

Vertical integration is the hottest trend in indexing and ETPs, and no area of the business has embraced that more readily than Wall Street itself. Recent deals by the ICE, Nasdaq and BATS signal the importance that stock exchanges place on the growth of the ETP ecosystem, from index construction and investing strategies to pricing data and even advertising.

PLY: Cheap commoditised content with a branded partner who endeavours to drive business to your exchange – what not to like?

 

CME New Aluminum A380 Alloy (S&P Global Platts) Futures

CME

Career Paths

JPX has nominated Kimitaka Mori as an additional candidate for director. JPX will put forth the director candidates for approval at the AGM to be held on June 21, 2016. Details here.

OpenDoor Trading, a platform designed to restore Off-The-Run Treasury (OFTR’s) and TIPS liquidity, has appointed Guy Haselmann as MD. He will report to Eric Green, Head of the Product Solutions Group.

Financial Calendar

18.05 – CME 2016 AGM

18.05 – Record date Oslo Bors NOK 4.15 dividend

19.05 – Record date ENX €1.24 yearly gross dividend

19.05 – Record date Thomson Reuters $0.34 quarterly dividend

19.05 – Tullett Prebon 11.25p final 2015 dividend payment

20.05 – ENX €1.24 yearly gross dividend payment

20.05 – NZX AGM

New! – 22.06 – BGC Partners AGM 2016press release.

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

Crowdfunding

Lending Club Under Probe by U.S. Justice Dept, Receives Subpoena

Heather Somerville & Rishika Sadam – Reuters

Inside the Final Days of LendingClub CEO Renaud Laplanche (subscription)

Peter Rudegeair & Annamaria Andriotis – Wall Street Journal

The allegations around Mr. Laplanche also raise tough questions for the fast-growing fintech industry.

PLY: Certainly there are a lot of breathy, gushy dreamsters in fintech currently and that requires a mass clearance but what seems to have emerged in the case of LendingClub was a good old fashioned corporate governance issue called “conflict of interest.” This dates back to the point where Adam and Eve ate forbidden fruit in contravention of procedure. Despite a lot of scholarly controversy down the ages, I feel one can safely assert the latter was clearly an incident which pre-dates the digital age.

Other stories

Online Trading Scams: Tips & Red Flags

Jacob Ma-Weaver – Times of Israel

PLY: Following on from yesterday where I mentioned Jacob in relation to the dark side of binary options…here is his useful guide to avoiding scams.

 

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