May 20 2016

elb2End of an era Friday in some respects but two tales of very different conclusions. Bill Brodsky will end his long goodbye to CBOE by standing down in 2017 as Chairman after 20 remarkable years with the Chicago options market which he, by turns, drove into new venues. Life looks more challenging for Philippe Buhannic who has been ousted as TradingScreen CEO under allegations of behaving like, well, the Canadian Prime Minister in his latest Parliamentary bout. Physical assault against staff is unacceptable and it is a tragedy for the executive and their brand. Looks like my bonfire of the vanities theme for 2016 is continuing unabated, with this sad news from TradingScreen.

Meanwhile, NASDAQ is doubling down on IEX legal suits which I fear could prove hyper-risky with the parish pitted against “BigWorld.” Lots of other interesting stuff too, happy scrolling.

Parish events: Next week I will be speaking at the Finance Malta May 25/26 on a FinTech theme.

Meanwhile the FESE Convention, is upcoming at the same venue, Malta, 15/16th June while ICDA have already delivered their discount code for their upcoming CyberRisk conference in London, July 20th: Secure a place at GBP 295 with the code YOUNG295.

Public Markets

Nasdaq Raises Lawsuit Threat Over SEC’s IEX Speed-Bump Plan (subscription)

Dave Michaels – Wall Street Journal

Nasdaq’s attorneys wrote that the SEC would violate its own rules by approving the IEX Group’s exchange, which includes a speed bump that slows incoming orders by 350 microseconds. The lawyers argued that the speed bump would trample rules that require orders be available immediately to other traders.

PLY:  The difficulty is that SEC is damned if they do and damned if they don’t: approve IEX that is – and that is not to say NASDAQ is without some argument because SEC created the festering mess of intervention called Reg NMS. So SEC faces a tricky binary option: Don’t approve and Main Street will descend on Wall Street perhaps not with pitchforks but it will be ugly. So it now looks as if legal action could flare up on either side of the argument. In this case, one worry must be that NASDAQ exposes itself to being seen as part of the Wall Street herd and not the champion of tech, smaller investors and so forth, as it has successfully appeared over the years…

There are big stakes at play here and this threat is a bit of a double down, particularly risky in the court of public opinion. Moreover, can the SEC Chairman now reasonably refuse IEX regulation without looking scared in the face of a NASDAQ threat? Somewhat counterintuitively, I think NASDAQ just tilted the balance in IEX’s favour of being regulated, albeit with a field day for the legal fraternity looming on the horizon it seems. That does not portend a “win win” situation, alas.


Go Slow For LSE Takeover As Regulatory Obstacles, Brexit & EU Politics Rear Their Ugly Head

Alex Brummer – Daily Mail

The very idea that somehow the £21bn ‘merger of equals’ would be done and dusted before the Brexit referendum was always a fantasy. The regulatory obstacles were always going to be considerable. Brexit and EU politics and rivalry were always going to rear their head.

QV Premium: DB1-LSE Merger Brief.

PLY: Pithy, Punchy and there is a third P-word which won’t make it through the corporate filter zone but let’s say, Perplexed, commentary from Alex Brummer… The fascinating point to note is that the rather Eurosceptic Daily Mail is favourably disposed to the rigours of the EC antitrust authorities. I think that’s a glint of realism entirely absent in the dreams of DB1 and LSE, both of whom ought to know better than to behave like lovestruck teenagers who have lunged precipitously into a premature, ill-considered, engagement.


NZX Chairman & CEO AGM Addresses



HKEX Considering Broader Rules On Reverse Takeovers

Elzio Barreto & Michelle Price – Reuters

HKEX may implement stricter rules to prevent companies sidestepping scrutiny of reverse takeovers (RTOs) and backdoor listings as part of a broad review of listing rules in the city.


Treasury Moves To Cap Shareholding At Nairobi Securities Exchange

Patrick Alushula – Standard Media

Stockbrokers at the Nairobi Securities Exchange (NSE) have up to six months to cede part of their equity in order to comply with new regulations from Treasury. According to the new NSE Shareholding Regulations that took effect last Friday, trading participants or simply stockbrokers will no longer be allowed to cumulatively hold more than 40% of the bourse’s equity.

PLY: Frankly this confuses me – in the rest of the world, an issue has been brokers selling their stakes and ending up with no interest. This I believe is the first case of counterparties collectively holding too many shares in a for profit, publicly traded venue at least.


Capital Markets Bright Spot: Exchanges

Shanny Basar – Markets Media

Total exchange revenues are expected to exceed $20bn for the first time this year and there will be more mergers as they seek to diversify their businesses and benefit from economies of scale according to consultancy Opimas.

PLY: Opimas CEO/Founder Octavio Marenzi, has, I believe been endeavouring to interest the parish in recent months with his latest consulting venture – the report spins out from that sales process. I entirely share his optimism. In fact if anything, I believe the opportunities are far greater in many directions.

Private Markets

Seoul Seeks To Extend FX & Stock Trading Hours

Yoon Ja-young – Korea Times

KRX and the government are seeking to extend trading hours of forex and stocks by 30 minutes in a bid to stimulate the market.


Judge Dismisses Mt Gox Class Action Lawsuit in Canada

Pete Rizzo – CoinDesk

Launched in 2014, the class action sought to recover damages plaintiffs lost in the exchange’s collapse, an effort that continues in the US…but not in Canada.

Dividend News

CBOE declared a quarterly cash dividend of $0.23 payable on June 17, 2016, record date June 3, 2016.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX slightly up, FTIL slightly down, resolution of NSEL case going slightly nowhere.


CFTC Targets Cyber Security, Automated Trading

Lisa Lambert – Reuters

CFTC plans to finalize rules on cyber security, automated trading and position limits this year, as it tidies up final requirements related to the Dodd-Frank financial reform law.

PLY: Proof, Pudding, Eating; Holding breath.


Hong Kong Launches Fresh Plan To Fortify Cyber Security After SWIFT Heist


The Hong Kong Monetary Authority’s latest measure, known as the “Cybersecurity Fortification Initiative (CFI),” plans to raise the level of cybersecurity at banks in Hong Kong through a three-pronged approach and follows similar steps taken by its counterparts from London to Vietnam.

PLY: But not it seems with Swift in Bangladesh…


Monetary Authority Of Singapore Makes It Easier For Retail Investors To Buy Corporate Bonds


SGX Provides Retail Investors Greater Access To Bonds


SGX Introduces Seasoning Framework Giving Investors Greater Access to Bonds

Rosemary Barnes – Finance Magnates

The framework will enable retail investors to buy wholesale bonds in smaller denominations.

PLY: Good news all round!


ICE – New Funds Rate Futures Contract & Product Advisory Committee


ICE announced an innovative interest rate contract that will facilitate term financing arrangements, such as repos. Consummated transactions in ICE’s Funds Rate contract will offer real-time transparency into the interest rate funding markets in a variety of currencies.

The patent-pending solution was developed and licensed by principal trading firm DRW, and has pricing characteristics similar to a zero-coupon bond. ICE is also establishing an advisory committee comprising financial institutions, liquidity providers and subject matter experts to help bring the contract to market in late 2016, subject to regulatory approval.

PLY: Fascinating development on all fronts. A great example of the seeds falling from the beanstalk delivering potentially exciting products as the OTC to open market morph takes hold as I have been briefing investors for years.


SEBI Tightens Rules On Offshore Derivatives


SEBI took steps to stop suspected illegal money flowing into the country by making issuers of securities known as offshore derivative instruments register their customers…


SwapClear Compresses Over $1 Quadrillion Of Cleared Notional


Notional outstanding now stands at $280 trillion, down from all time high of $452 trillion in November 2013. Over one million trades, representing $115 trillion in notional compressed so far in 2016.


EEX To Launch Further Maturities On The Power Derivatives Market



Tradeweb Pushes New Credit Trading Model In Europe (subscription)

Tim Cave – Financial News

Tradeweb has adopted a new approach to credit trading in Europe as it responds to increased competition and reduced liquidity in the sector.

Career Paths

Brodsky, CBOE Chairman Who Took Exchange Public, To Resign

Brian Louis – Bloomberg

William Brodsky will step down as Chairman of CBOE Holdings next year, ending a two-decade run at the biggest U.S. options exchange that he took public in 2010. He was CEO of the company, which runs the Chicago Board Options Exchange, from 1997 through 2013. Brodsky joined CBOE from the CME, where he’d been CEO since 1985. He plans to work for Cedar Street Asset Management, his son Jonathan Brodsky’s investment firm.

PLY: Good luck to Bill. He has been a longstanding C-suiter in Chicago, heading CME before going to CBOE. Having passed on to the Chairmanship upon retiring as CEO, it was always likely he would stand down in the near future from CBOE. It was a pleasure to serve with Bill on the board of SFOA for many years and he was perhaps the most productive Chairman of WFE in the history of the organisation.

CBOE AGM 2016 Results – he elected board members will serve one-year terms expiring in 2017: James R. Boris, William J. Brodsky, Frank E. English, Jr., William M. Farrow III, Edward J. Fitzpatrick, Janet P. Froetscher, Jill R. Goodman, R. Eden Martin, Roderick A. Palmore, Susan M. Phillips, Samuel K. Skinner, Carole E. Stone, Eugene S. Sunshine, Edward T. Tilly.      

William M. Farrow III is a new member of the CBOE Holdings BoD. He currently serves as a director & President & CEO of Urban Partnership Bank, a position he has held since 2010.  

Chairman William Brodsky announced he does not intend to be a candidate for director in 2017.  

In the coming year, the CBOE Holdings board intends to review its leadership structure, including considering the option to combine the roles of Chairman & CEO, while continuing to appoint an independent Lead Director, based upon what it believes to be in the best interests of its shareholders.

PLY: The positions used to be joined during Bill Brodsky’s executive tenure.

NZX AGM 2016 Results: Dame Therese Walsh and James Miller – re-elected as a Directors of NZX.


Bloomberg reports that veteran business executive Pedro Parente, currently the Chairman of BM&FBovespa, accepted an offer to become Petrobras’s third CEO in less than two years.


ayondo, the FinTech and Social Trading Pioneer, appointed Rick Fulton as CFO. Fulton is joining from Daiwa Securities, where he was MD, Regional CFO Asia & Oceania.


TradingScreen CEO Buhannic Accused of Assaulting Employee

Jef Feeley & Annie Massa – Bloomberg

TradingScreen CEO Philippe Buhannic was suspended after being accused of assaulting an employee, touching off a battle for control of the financial-software firm, according to court filings and a hearing transcript.

PLY: By the looks of it, a very unfortunate ending to the leadership of TradingScreen by its co Founder and prime mover, CEO Philippe Buhannic, locked out of his company by, it has to be said a braver board than many I have seen in the face of founders’ actions. Doubtless there are other skeletons in C-suite cupboards out there…

Financial Calendar

20.05 – ENX €1.24 yearly gross dividend payment

New! 21.06 – JPX AGMnotice

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

Other stories

Deutsche Bank May Punish Employees for Personal Trade With Firm

David Scheer – Bloomberg

Auditors estimate employees gained about $37 million.

PLY: Ugly situation but then again how different is that to just punting the entire company on a heads management wins, tails shareholders lose basis? That seems to be quite the play around some corners of financial markets I can think of.


Advisory Committee On Small & Emerging Companies Opening Remarks, SEC Commissioner Kara M. Stein, May 18, 2016



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