October 06 2015

elb2PLY: Google, may be harmonising with Symphony as the messaging company’s valuation reaches a giddy 650 million valuation. Meanwhile, the EU has this AM struck down “safe harbour” Trans Atlantic data provisions which further endangers the precarious future of Europe just when its relative stagnation is writ large by the Obama pivot producing value out east: The Trans Pacific Partnership creates the world’s largest trade bloc – 40% of the global economy is conjoining…albeit with some likely silly protectionism for US pickup trucks amongst other smallprint to be duly combed. Canadian Prime Minister Stephen Harper, clearly motivated by catching up on the general election hustings, noted pithily: “We have chosen a future of participation over isolation.”

Elsewhere Irish Regulators reject Playtech acquisition of AvaTrade which may have ramifications all the way to the parallel Plus500 acquisition… Things could yet turn a tad seismic: caveat arbitrageur!

Yesterday, by the way I probably didn’t emphasise sufficiently the healthy regulatory smackdown which descended upon Hong Kong – for now the notion of split share classes is not being pursued… Also, yesterday LSE Turquoise began trading the WIG-30 stocks, marking a first competitive salvo against Warsaw’s erstwhile unchallenged monopoly…the GPW of course backed “all you can eat” platform Aquis a while back in London. Meanwhile GPW subsidiary TGE is preparing to launch electricity futures. Interesting times…

Coming up November 12th: the MondoVisione Exchange Forum. I will be chairing the lively event for the second and final time. It looks like another excellent event, run to a prompt time schedule like last year. Click the link to register.

Now, time to scroll, enjoy your daily Exchange Invest Digest, the catchily numbered edition 604:

Public Markets

EBS BrokerTec Acquires Molten Markets


ICAP’s EBS Buys Funds-Focussed Molten Markets


EBS took another step into the asset management sector by purchasing Molten Markets, a specialist in fx trading technology for investment managers. Price was not disclosed.

PLY: An interesting pivot to capture business beyond the traditional IB space.

In Premium Exchange Deals Brief.


Betfair Investors To Raise £250m From Share Sale

Daily Telegraph

The former JPMorgan banker who co-founded Betfair and the billionaire behind luxury goods group LVMH are selling almost £250m (USD 380 mln) of shares in the betting exchange, after the company agreed a £6bn (USD 9.1 bln) merger with Paddy Power.

Ed Wray and his family are offloading 2.75m shares in the company that he set-up sixteen years ago, (worth approx £92.6m (USD 140 mln)). Meanwhile, Le Peigne, which manages money on behalf of LVMH boss Bernard Arnault and his family, is halving its stake in Betfair by selling 4.6m shares (worth nearly £155m (USD 235 mln)).

Read our Premium Exchange Deals Brief Part 1, Part 2.


Playtech’s $105m Pitch For Dublin Broker Is Blocked

Paul O’Donoghue – Irish Independent

The Central Bank has blocked the proposed $105m takeover (announced in July) of Dublin based CFD broker AvaTrade by online gambling software giant Playtech.

PLY: The Irish Central Bank is not comfortable with Playtech buying Ava – how does that leave the UK FCA which must also decide on the contentious Plus500 takeover by the same buyer? Dublin just upped the ante in what could yet prove a spectacular implosion of dealmaking failure impeded by regulatory fiat…

Read our Premium Exchange Deals Brief Part 1, Part 2.


HKEx Gives Up On Dual-Class Share Plan (subscription)

Jennifer Hughes & Josh Noble – Financial Times

As reported yesterday, HKEx has given up on letting companies to sell shares with different voting rights, dealing a big blow to its efforts to attract high-profile technology companies to list in the territory.


CME’s London Foray Lost More Than £5m In 2014 (subscription)

Tim Cave – Financial News

CME Europe lost over £5 million (USD 7.6 mln) in it first year of operation, underlining the difficulties of launching a new marketplace in the region.

PLY: CME losing 5 million a year on a full exchange licence strikes me as a drop in the ocean compared to the (after swingeing cutbacks) million dollar a month money pit which is the NASDAQ NLX MTF. Not pretty but not dire ether for the Chicago parent. CME Europe at least has some trading product moving forward while NLX is struggling with a pivot on the back of a heavily (many say terminally) damaged credibility. (NLX results were reported in September). Given the relatively high cost base of the major legacies, I think CME are rather impressive at only losing circa 8 million dollars with their new European exchange.


TABB Group’s Larry Tabb Rebuts ASX CEO Elmer Kupper, Writes “Competition, Technology And Market Efficiency In Australia”


Contrary to claims by ASX CEO Elmer Kupper, exchange competition lowers fees, brings new entrants into the market, reduces spreads, and makes markets more efficient, says global market structure analyst, TABB Group CEO, Larry Tabb (previous discussion here).

PLY: I have a mailbag burgeoning with “oh now Elmer has really lost the plot” comments from those interested in life in the Antipodes, that fine nation with sometimes worryingly Dickensian sentiments about red brick exchanges and their monopoly factories. I am minded to ask in collective reply “Can anybody helpfully prompt me to remember just when Elmer actually had the plot?”

…(read the rest in Premium)…As things stand, Larry has called out a ridiculous line of argument which leaves me wondering just why Elmer is in charge…The ASX is fundamentally damaging the competitiveness of Australia and this great nation deserves better market infrastructure, particularly as it sits on the precipice of a dynamic new TPP era.

Read our Premium ASX Monopoly – Brief – Part 3.


Buy Side: Central Clearing ‘A Mess’ As Sell-Side Dialogue Hits ‘Fever Pitch’ (subscription)

Luke Clancy – Risk Magazine

Central clearing is a “mess” as a result of the impact of the leverage ratio on clearing brokers, according to buy-side market participants, but in limited circumstances asset managers may consider clearing earlier than they have to.


Euronext Signs MOU With Haitong Bank s.a.



ESMA Informs European Commission Of Delay In Submitting The RTS On Indirect Clearing Under MiFIR


Private Markets

NYSDFS Grants Charter To “Gemini” BTC Exchange Founded By Cameron & Tyler Winklevoss – 3 Virtual Currency Firms Have Now Received NYDFS Charters or Licenses: Gemini, Circle, itBit


Winklevoss Twins Prepare To Launch Bitcoin Exchange (subscription)

Philip Stafford – Financial Times

Winklevoss twins exchange, known as Gemini after the twins’ Zodiac sign, was on Monday granted a charter under state law by the New York State Department of Financial Services (NYSDFS) & will open for trading on Thursday, available across 27 US states.

Previously discussed here and here.


US Govt To Sell 44,000 BTC In Final Silk Road Auction

Pete Rizzo – CoinDesk

The US Marshals Service (USMS) has announced it will sell 44,341 BTC (approx $10.6m) in an online auction 5th November.

Previous auctions here and here.

PLY: I thought they had sold it all already but maybe this is the stuff they got back from the bent cops who misappropriated various items on the way through.

Special Section: FTI, NSEL, India at the Crossroads

PLY: MCX flat, FTIL up nearly 3%.


Google To Invest In Symphony?


Google, (now morphing into holding company Alphabet), is in talks with messaging startup Symphony for a round of fundraising which could value the company at about $650 million.

PLY: Big news to see Google interested here (will the Alphabet brand catch on? I’m not sure that idea has, er, ‘alpha,’ no matter how hard they push, frankly). Bloomberg are bound to be even more worried than ever before.


BSE Implements Precision Time Protocol At Its Platform


Bombay SE (BSE) implemented Precision Time Protocol (PTP) at its platform and has also started extending it to all the members trading from its co-location facility.

PTP versus Network Time Protocol (NTP) which has been largely discredited for use in this domain, aka delivering timestamps in the nanosecond range… That said, my understanding remains that data timing this granular in complex network environments raises all manner of potential issues. I am not convinced it can be accurate given even microscopic (nanoscopic?) differences in hardware for instance?


Duco Establishes U.S. Subsidiary, Opens First North American Office In New York


Last month ICAP announced a further investment in Duco.



TGE Prepares To Launch Financial Instruments Market


TGE Financial Instruments Market (FIM) set for launch November 4 with electricity futures the first product.


KRX Eyes Listing Of Foreign ETFs

Korea Times

Korea Exchange (KRX) seeks big-name ETFs, including SPDR Gold and iShares Silver Trust, foreign currency ETFs et al (including Yen and Yuan).


MOEX Active Derivatives Market Client Accounts Surge To Nearly 43 Thousand


Career Paths

ICAP said Simon Wilson-Taylor, current President & CEO of Molten Markets, is joining EBS BrokerTec in New York as Head of EBS Institutional FX as part of the ICAP – Molten Markets deal.

Erica Williams will be leaving the SEC after serving as deputy chief of staff to three Chairmen, Mary Jo White, Elisse B. Walter, and Mary L. Schapiro. Michael Liftik will become deputy chief of staff.

Duco has appointed its first New York based hire. David Zelinger has joined Duco Technology as MD, Americas.


ICEX In Search Of MD

Dilip Kumar Jha – Business Standard

Indian Commodity Exchange (ICEX) intends to relaunch by appointing a MD & CEO.

Financial Calendar

New announcement

ICE Q3 2015 Results – Tuesday, November 3, 2015 – press release here

TMX Q3 2015 Results – Thursday, November 5, 2015 – press release here

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

Share Notes

Euronext Share Repurchase


In a first tranche, Euronext repurchased 317,195 shares (average price €39.7321) for a total consideration of €12,602,834.78 to cover past employee share plans. A second tranche will be initiated soon to cover LTI plan for 2015.

Analyst Notes

CBOE Target Price Raised By Barclays From $57.00 To $58.00 – “Equal Weight” Rating

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


Equity Crowdfunding Market No Longer The Preserve Of Start-Ups (subscription)

Brian Groom – Financial Times

PLY: Crunchy stat: Average raise almost 200000 GBP in the UK (over 300K US).

Other stories

Yuan Picks Up Pace As Global Currency (subscription)

Chiara Albanese – Wall Street Journal

The yuan moved ahead of the Japanese yen for fourth place in a league table of the most-used currencies for cross-border payments for the first time in August, mainly because of volatility in Chinese markets.

Read in Premium China Capital Markets Transformation Brief – Main File.


DTCC: T+2 Industry Steering Committee Applauds Regulatory Support For Move To Two Day Settlement Cycle In The U.S.


T+2 Industry Steering Committee Applauds Regulatory Support For Move To Two Day Settlement Cycle In The U.S.


PLY: Settlement can now take place in circa 173000-216000 seconds. A standard public Blockchain transaction averages 480. Amid the wondrous collective back patting of smug modernity, I think we need a great leap forward to something more real-time…


Building Healthy Capital Markets – Eurofi Keynote Address SEC Commissioner Kara M. Stein, Luxexpo, Luxembourg-Kirchberg


PLY: A September 10 keynote suggesting the SEC isn’t on T+2 for data dissemination.


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