November 09 2015

elb2The worst kept secret in the IDB world is out there: TNT is in talks to acquire significant ICAP voice-related assets through a mega-dilution. It’s a fascinating deal which creates a stunningly appealing path for both parties to profit in the future. It also reminds us of the innate dealmaking genius of Michael Spencer. There are only two major league entrepreneurs in market infrastructure with a truly global scale and I am convinced those who have, behind his back, been writing off Michael Spencer in recent months will prove as spectacularly wrong as those who are foolish enough to infer that we have reached an ICE age peak. Between the offices of Michael Spencer and Jeff Sprecher, we will see a great deal of the future of markets being shaped. They, have the unique power to pursue their destiny where too many others are merely placeholder managers in this industry. There are some very honourable exceptions in the managerial C-suite but the “S” Class entrepreneurs who have created their dynamic leviathans are the men I would see as most pivotal to fundamentally changing markets going forward…

Public Markets

Tullett Prebon Trading Statement

Tullett Prebon

Revenue in the four months July to October of £255m (USD 385 mln), up 9% YoY.


Tullett Prebon In Talks To Acquire ICAP Broking Business (subscription)

Philip Stafford – Financial Times

ICAP Confirms In Talks With Tullett Prebon


Michael Spencer: The £700 Mln Dealmaker Close To David Cameron

Nick Goodway – Evening Standard

Icap/Tullett Talks Bring Big-Brand Advisers To The Table (subscription)

Vivek Ahuja & Tim Burke – Financial News

Bitter Feud Ends After Icap & Tullett Prebon Agree Merger (subscription)

Martin Waller – The Times

ICAP is in talks to sell its global broking business to rival Tullett Prebon in the biggest shake-up to the world of IDB in more than 30 years. The proposed deal, announced on Friday, would see Tullett take on nearly 1,500 of Icap’s brokers who help negotiate deals for assets in the OTC markets by phone. It will also take some of Icap’s data and electronic swaps venues as John Phizackerley, Tullett CEO, aims to fulfil his ambition of making the company the Goldman Sachs of the broking world.

PLY: Not quite a Savile Row versus Main Street shuffle but that’s a fair metaphor for the space we have here As long rumoured, ICAP sheds high cost, high management bandwidth, voice-centric assets and is left concentrating on electronic markets/post trade. That’s a great place from which to deploy Michael Spencer’s excellent strategic nous, and, let’s face it, a track record of deals which stretches back to years before any exchange had mastered much more than the art of marrying their cross asset cousins in the neighbouring city streets. Good for Tullett too, it was too small to be serious and too big to be a boutique, now it has an industrial heft potential which gives it a remarkable “content machine” which it needs to develop into next generation services.

ICAP has long been viewed as essentially a proxy to an exchange group – it is now pivoting to become a ‘cleaner’ pure play bourse business with a rather sexy roster of assets, most every one of them burgeoning with optionality… This deal, if concluded, is excellent for markets and good for users of markets.

BNP To Shut H.K. Dark Pool Amid Tougher Rules

Alfred Liu – Bloomberg

Hong Kong will get a tougher regime for dark pools from Dec. 1. Bank-operated trading venues provide the only alternative to HKEx. BNP’s local unit was fined HK$15 million ($1.9 million) by Hong Kong’s financial regulator in August for breaching rules that set out how its dark pool should operate.


Fears Mount Over CCP Client Porting (subscription)

Robert Mackenzie Smith – Risk

FCMs may not be willing to absorb a defaulting clearing member’s client positions, CCPs and regulators warn.


Clearing Groups Explore Buyside Access (subscription)

Tim Cave – Financial News

The world’s largest clearing houses are ramping up their efforts to offer direct access to buyside firms, in a bid to fill the void left by banks retreating from the clearing business due to punitive capital charges.


Virtu Says Has Had No Issues With IEX ‘Speed Bump’

John McCrank – Reuters

Virtu Financial on Friday expressed its support to regulators for upstart stock trading venue IEX Group, which has applied to become a registered U.S. stock exchange.

FAO: Last week there was also an SEC comment letter concerning the IEX exchange application from a certain Patrick L Young.


Why Bulgaria Should Join A Regional CCP


PLY: Interesting article from the EBRD discussing the Eastern European regional CCP plan. Author Hannes Takacs is on my panel at the MondoVisione Exchange Forum this Thursday discussing the exchange business…


CFTC Orders $3.2B In Total Monetary Sanctions Against Wrongdoers In FY 2015

Maria Nikolova – LeapRate

CFTC published the agency’s enforcement results for FY 2015, which included a record $3.144 billion in civil monetary penalties and $59 million awarded in restitution and disgorgement orders.


OTC Derivatives Regulators Deliver Report To The G20 Leaders



HFT Law Goes From Bête Noire To Blueprint (subscription)

James Rundle – Financial News

Private Markets

Shanghai To Curb Length Of Share Trading Halts (subscription)

Jennifer Hughes & Gabriel Wildau – Financial Times


National Stock Exchange, Inc. Announces Plan To Relaunch Exchange


Discussed Friday.


Wait For CSE To Resume Operations Continues

The Economic Times

Calcutta SE (CSE) is the lone surviving regional exchange out of the 17 at one point. CSE has gone to court with the intention to stay afloat. QV EI Premium: Indian Exchanges Shutdown – Brief.


$1 Billion Invested So Far in Bitcoin & Blockchain Infrastructure

Jamie Redman – Cointelegraph

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX and FTIL both off 2%, as NSE

HC Dismisses NSEL Plea To Quash Invocation Of MPID Act

The Economic Times


Square Seeks More Than $300 Million In IPO

Alex Barinka, Ville Heiskanen & Amy Thomson – Bloomberg

Square’s Lower IPO Valuation Casts Shadow Over Startups

Alex Barinka & Sarah Frier – Bloomberg

Square Inc. is aiming for a valuation of as much as $4.2 billion in its IPO, well short of the $6 billion the mobile-payments service sought in its latest funding round.

PLY: For all those folks who say PE is omnisapient, it has to be said they can have lapses in later rounds. When a massive rush gets in behind the latest ‘new new thing’ it can apparently go to their heads! Square is still a fascinating business btw, but as George Bernard Shaw reputedly said in different circumstances, “now we’re just haggling over the price.”


Illuminate Financial Management Successfully Launches Fintech Venture Capital Fund

Illuminate Financial

DB1 & Markit Lead Backing For $50m Fintech Fund (subscription)

Anna Irrera – Financial News

DB1 & Markit have backed the capital markets fintech investment fund Illuminate Financial launched in February 2014 by former head of post-trade at Icap, Mark Beeston.

PLY: Good luck to Mark Beeston who has brought his fund together to concentrate on post trade investments – where there are fewer projects overall but then again significantly fewer fintech charlatans currently bubbling.


‘Rebranding NSE Indices Will Increase User Confidence’

Oommen A. Ninan – The Hindu

Career Paths

ESMA elected three new members to its Management Board to replace outgoing members whose term expires in November this year. The election took place at the Board of Supervisors meeting in Luxembourg on 5 November and the successful candidates, who will serve a term of 2½ years beginning on 1 December 2015, are:

Lourdes Centeno, Comisión Nacional del Mercado de Valores (CNMV), Spain – new member;

Klaus Kumpfmüller, Finanzmarktaufsicht (FMA), Austria – ending first term and re-elected;

Elisabeth Roegele, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Germany – new member.

The outgoing members were Kostas Botopoulos from the Hellenic Capital Markets Commission (HCMC) of Greece, and Martin Wheatley of the UK’s FCA.

The Management Board now consists of:

Steven Maijoor, ESMA;

Elisabeth Roegele, Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), Germany;

Cyril Roux, Central Bank of Ireland (CBI), Ireland;

Lourdes Centeno, Comisión Nacional del Mercado de Valores (CNMV), Spain;

Gérard Rameix, Autorité des Marchés Financiers (AMF), France;

Klaus Kumpfmüller, Finanzmarktaufsicht (FMA), Austria; and

Marek Szuszkiewicz, Komisja Nadzoru Finanswego (KNF), Poland.


Reuters reports that Bonnie Liu, an SVP at HKEx , has left the company.


NBR reports that NZX appointed former AMP Capital Investors executive Guy Elliffe and John Williams from Trust Investments Management, as independent directors to the Smartshares board.


Lahore SE Employees Wary Of Merger, Fear Job Losses

Shahram Haq – Tribune

Uncertainty is rampant among 120 employees of LSE, including its MD, as they fear about the fate of their careers. QV EI Premium: Pakistan Exchanges Merger Brief.


ESMA: Vacancy Notice – Seconded National Expert – Secondary Markets Profile (Deadline Extended To 30 November 2015)



HKEx: Listing Nominating Committee Seeks Listing Committee Candidates


Term of approximately twelve months commencing in July 2016. The Listing Nominating Committee will consider reappointing existing Listing Committee members who have served for less than the maximum term of six years prescribed by the Listing Rules.  Applications should be submitted on or before 15 January 2016.

Financial Calendar

10.11 – Markit Q3 2015 Results

12.11 – MondoVisione Exchange Forum – chaired by EI Founder Patrick L Young.

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

Other stories

FIA Futures & Options Expo – “Regulators Are Balkanizing The Markets”


FIA Futures & Options Expo – Tom Groenfeldt: Cybersecurity Concerns Regulators And Traders


FIA Futures & Options Expo – Tom Groenfeldt: Blockchain — The Hype Is Real, Some Of It


FIA Futures & Options Expo – Tom Groenfeldt: Blockchain — Clearing, CCPs Gaze Into The Abyss




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