October 21 2016

elb2The big news out of Expo overnight was the victory by Money.net in the Innovators Award. FIA made a great move by encouraging the innovators pavilion last year and it has already showcased some excellent new entities – e.g. Duco and GMEX were two from last year’s take-up which spring to mind. In awarding the jury prize to Money.net the FIA at once has shown a sensible link to its grass roots – FCMs and their clients, as well as recognising a bottleneck in an era of wafer thin commissions where as John Damgard once put it of exchanges themselves “the status quo won’t do.” There have been various challengers to the backbone of Bloomberg/Reuters’ terminals but Money.net pushes the right organisational and AI buttons to inaugurate a new age.

This is a prescient moment for reflection as the big two are now fundamentally at risk – 2500 USD per terminal / year flattens the landscape of market access (and BTW highlights market data costs, that’s a story for another day…). Like all good predatory transformations, Money.net can eat the heart out of the comfortable pantry of Bloomberg or the deliciously dated but always surviving Reuters. It’s war in the terminal market. The Capital Market Revolution reaches another fascinating stage. Amidst many great business models in the Innovators Pavilion, he judges have chosen wisely.

Elsewhere at the BBA conference in London, the ECB’s Andreas Dombret warned of government intervention in central banks: “Politicians are well advised not to exert influence in the wrong place or with the wrong measures” he intoned. What prescient words – politicians must feel threatened that screwing up the economy is now the prerogative of the central bankers who clearly relish their newfound, if utterly abused, power. There was an acute localism to the remark too as the British government fired a shot across the bows of the perma-wrong Bank of England governor Mark Carney recently. I love Canada but share a belief with many that the serially on the wrong side of the argument, Mark Carney has distinctly overstayed his UK welcome as head of the Bank.

Or as The Spectator has remarked pithily this week:

“As Mr Bennet, in Pride and Prejudice, says to his daughter Mary, who is playing the piano badly: “You have delighted us long enough. Let the other young ladies have time to exhibit.” It is time for Mr Carney to shut the piano and go home.”

In Today’s Exchange Invest

Money.net may not be the new plastic but it will have a massive impact. Elsewhere the future of Europe’s most innovative equity options market, TOM, is open to question.

All this and more in what is worth a scroll as always…


Soon: Burgenstock is back, slightly later than usual due to Swift invading Geneva in September. Time to Claim your discount code via Exchange Invest: (see banner on left- and use this discount code “YOUNG15” to get 15% off the delegate fee).

The Stuttgart SE 10th Anniversary MIFID Conference also advertised to your left looks most interesting and I am delighted to be chairing a session there November 17th.

In BigWorld

Larry Sanders, brother of Bernie placed 4th in the Witney by-election to replace retiring MP David Cameron who, you may remember, once ran the UK in a chillaxed fashion. Green party candidate Larry was 9 votes ahead of the imploding UKIP with 1363 votes or 3.54% of the total…albeit some way the clear winner for Cameron’s Conservative party (unsurprising in the Tory heartlands of Oxfordshire).


Public Markets


LDB1-LSE Probe To Be Extended by 2 Weeks

PLY: Interesting – said to be examining possible remedies…as I mentioned yesterday hopefully the EU antitrust folks have not biodegraded into monkeys so unless it’s a deal without LCH.Clearnet in its entirety for starters, they won’t be voting for the merger of equal desperation and a horribly monopolistic European securities domain which will be bad for markets.

Solid Quarterly Earnings At LSE
Reuters UK

PLY: Excellent numbers all round and from LCH in particular, they must have acquired some good quality steam to power the legacy IT systems.

Brazil Delays Tax Judgment On 2008 BM&FBOVESPA Merger

PLY: 2008 merger is with a tax appeal concerning alleged improper goodwill to generate tax credits. Hearing suspended as one panellists asked for time  to review evidence.

Zero Wedge: Shrinking Margins & Increased Regulation Leaves ‘Restrained Optimism’ For Gold
Platts (blog)

PLY: Interesting review of LBMA conference in Singapore.

When it comes to London gold trading, I always think of the author Douglas Adams discussing Earth and unhappiness in the Hitchikers Guide to the Galaxy: “Many solutions were suggested for this problem, but most of these were largely concerned with the movement of small green pieces of paper, which was odd because on the whole it wasn’t the small green pieces of paper that were unhappy.”

A Nasdaq Speed Upgrade Is Threatening IEX
Wall Street Journal

The time it takes for trades executed at U.S. exchanges such as IEX to be published on Nasdaq’s consolidated feed of stock prices will shrink Monday…

PLY: Not so much a SIP as a series of speedy glugs in the offing. However, it is interesting to see how the media now uses IEX as the reference point for stock execution stories – marketing catnip to Brad and his team but doubtless a tad frustrating for those incumbents who actually have not done such a bad job for anywhere up to a few centuries…

Sprecher Hopes Brexit To Prompt Mifid Review
FOW magazine

PLY: ‘Round here I am at the ‘pick a deity, any deity and pray’ stage that we can combat the idiocies of so many regs and particularly the great waste of time predicated as MIFID II. Anyway here is FOW’s take on Jeff’s remarks at the FIA Expo where he politely but viscerally savaged the waste of time, space and effort which is MIFID II, as previously mentioned yesterday.


Private Markets


TOM Shareholders To Explore Strategic Alternatives

PLY: So, the new CEO of TOM, Hans Pieterse is in situ to find some form of investment euphemism. Expand or sell is apparently on the table. With NASDAQ owning 25% since their prescient 2012 deal with an option (expiry date & precise terms unknown) to raise the stake to a majority (50.1%) they are in the cat bird seat to own what is perhaps Europe’s most dynamic options market. I suppose one may make a vaguely runic observation that perhaps there is scope for another acquirer to trump NASDAQ but it seems they have the advantage of competitors to scoop up the entire company – then again why make such a public announcement if there is no leverage to do a deal away from NASDAQ? …Something to ponder across the weekend.

PM Modi To Unveil Tower That Will House Entrants To GIFT IFSC
The Indian Express

The building developed by Mumbai-based Hiranandani Group is expected to house the newly incorporated Bombay Stock Exchange IFSC Ltd

Misys Struggles To Show It Has Changed Its Ways Ahead Of IPO

PLY: The industrial behemoths of early financial technology are now somewhat hoist by their own petard. Their confidence and, er, stability (some might say stasis), has been perceived as monopolistic hubris if not outright arrogance. The market likes the cashflow but sees big risks ahead to legacy vendors’ relatively archaic models and structures, if not IT itself. This is not limited to Misys and while they may not be the direct blitzkrieg target of money.net the impact will be felt across the market.

Hungary Aims To Energise Budapest SE As Part Of Stimulus Package

PLY: Körmöczi Dániel Deputy CEO of BSE made an elegant contribution to the inaugural Capital Markets Summit last month incidentally.

House Passes Bill To Continue Junior Stock Market Incentives
Jamaica Observer

Sebon Mulling Allowing NRNs To Trade Stocks
The Kathmandu Post

The Securities Board of Nepal (Sebon) is considering permitting non-resident Nepalis (NRNs) to invest in Nepal’s securities market.

Tomas Carruthers, Founder & CEO of The Social Stock Exchange

PLY: The excellent UK Share Radio interviews Tomas about SSE and social investing.

Bundesbank’s Dombret Says Euro-Clearing Hinges On Using EU Rules
Reuters UK

PLY: Kind of. In the war of words surrounding the acrimonious divorce of Brexit where the spurned blob mob are behaving in an overwhelmingly unseemly manner. Here is more spurned spousal abuse from a central bank itself kind of without a real purpose – other than applying duct tape and praying their ill-planned project can survive.

It is, however, always amusing to see how central banks propagate the message of open markets and competition until anybody comes within a few hectares of their turf at which the entrenched defence of their increasingly dubious black arts would shame a 1960’s teamster.

100000 Jobs at Risk in London Financial Clearing

The location of clearinghouses for Euro denominated trades emerged as one of the first flash points in the divorce talks between the U.K. and the EU.

PLY: Nice extrapolation. Not very good base of logic but anyway, clearly the complexity of clearing is defeating many minds in markets currently. The worry-mongers of Bloomberg miss out the one vital statistic of course which undermines the worrymongering.

Hopefully Money.net can program their bots to be neutral? That would be a great leap forward in financial news: cheap _and_ credible works for me.

Trade Associations Urge Regulators To Improve Clearing Transparency
GlobalCustodian.com (subscription)

Derivatives Exchanges Firm On Bank Inclusion In Clearing
GlobalCustodian.com (subscription)

Speaking at FIA Expo 2016 in Chicago, the head of CME and Jeff Tessler of DB1, reaffirmed their commitment to the banking community.

PLY: Skin game repo writ large here. Given the buy side even frets about buying its own drinks the likelihood they would volunteer to help bail out clearing is low, that’s what FCMs are for as they appear to see it.

Special Section: FTI, NSEL, India at the Crossroads


PLY: Jignesh has enjoyed a day outside the confines of jail…I’ll spare you all the  reportage, that precis ought to suffice.


The Experts’ View: How Can Financial Firms Most Efficiently Manage Their Data?
Business Reporter




Chi-X Preps Rollout Of Transferable Custody Receipts in Australia

PLY: Birth due early Feb. As noted in March when first announced, I remain a big fan of local currency denominated products, have been for years.

REPO Operations With SOCAR Internal Currency Bonds Open on Baku SE
Azerbaijan Business Center


First BlackRock Then Schwab: ETF Price War Intensifies

Career Paths
Senior Treasury official Emil Levendoglu has apparently taken a career break from HM Treasury and been drafted into the European Financial Services Chairmen’s Advisory Committee (EFSCAC), a body chaired by Baroness Vadera which was absorbed into TheCityUK quango.

PLY: Given a committee made up of unapologetic remainers such as XavRol, the biggest worry is that a committee of legacy figures with a strong record of backing the wrong horse while broadly bereft of foresight are hardly ideal to be the visionaries for the future of the UK-EU relationship. That said the issue may be more that while financial folks can stop themselves out and follow the new trend (at least the proper traders can, whereas the placemen cannot), the issue may be more the politician in charge of said committee. Apart from her woeful record supporting the near bankruptcy of Britain under the dismal Blair-Brown era of economic mismanagement, she may just be another frothing remainian. Hence my favourite pithy headline of the day (how very English!):

CITY DIARY: Is All Tickety-Boo At Santander Chairman Baroness Vadera’s Post-Brexit Task Force?
This is Money



UK P2PFA Data: Over £700 Million in New P2P Lending During Q3
Crowdfund Insider

The UK Peer to Peer Finance Association (P2PFA) has released data for member platforms for Q3 2016.

Couples Desperate For Children Turn To Crowdfunding Fertility

Korea Insurer Buys Shares In Lending Club, Sees P2P Loans As New Alternative
hankyung.com (press release) (subscription)

South Korea’s Hanwha Life Insurance Co. Ltd. has bought a 4.1% stake in U.S. Lending Club Corp., the world’s largest peer-to-peer (P2P) lender,

P2P Firms To Form An Association For A Fair Code Ahead Of RBI Guidelines
Economic Times

Title III Crowdfunding Might Not Be What Many Expected
Crowdfund Insider

Other Stories
How A Goldman Sachs Trader Can Make $100 Million In The Volcker Rule Era

It looks like proprietary trading. It walks and talks like proprietary trading. A Goldman Sachs junk-bond trader earned more than $100 million in profits…

OCC Response to Resilience and Recovery of Central Counterparties

– Letter to The Committee on Payments and Market Infrastructures (CPMI)…

Remarks By Treasury Acting Assistant Secretary For Financial Markets Daleep Singh On Interest Rate Benchmark Reform At FIA Expo
US Gov

The Coming ‘Spotification’ Of Futures Markets: The Market Fix For Retail Securities Trading
Seeking Alpha

PLY: Amongst an ongoing stream of thought provoking comments by Kurt Dew.

The Casablanca Stock Exchange is hosting the 8th meeting of WACMIC
Mubasher Info

The Casablanca Stock Exchange hosts on 20 and 21 October 2016 the 8th Council “West African Capital Markets Integration Council” (WACMIC).

Money.Net Wins FIA Innovator Competition

PLY: Once again: this is a potentially seismic upset in the financial terminal business – a whole new playing field for traders and investors the world over.

Kenyan & Australian Regulators Sign Agreement To Support Fintech Innovation

PLY: Kenya has of course debuted revolutionary products such as M-Pesa so it is to be hoped that some of this radical pro-technology zeitgeist can rub off from Africa on ASIC.

…Two days without Blockchain (albeit the Winkelvoss bros did announce their custodian for the Bitcoin ETF but it missed the cut) and a welcome poignancy of announcements from FIA Expo, well done PR folks.

It’s (nearly) time for the weekend, have a great one,

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