September 04 2015


Russia & China discussing cross-border settlement alternative to Euroclear / Clearstream. DB1 funding 360T deal. EU “phones a friend’ to gain guidance on the $12. quadrillion dollar question. Cinnober BOAT & LSE to build MIFID II TR solution. Crowdcube TriOptima reduces CME swap positions as UBS looks at interbank coin settlement concept – how long before the regulators cry antitrust on that one? The Blockchain is of course back centre stage at Young Markets September 17th in Warsaw, building on our past discussions back when markets were ignoring it years ago!

…and Burgenstock is drawing near, a cracking Crossfire is on the horizon and I am delighted to be returning with the panel to chair it. The SFOA is amongst the industry groups I discuss in the Premium Post: Association Alert – The State of the Clubs (Part 1).

Happy Labor Day to all our American readers – we’ll be publishing as usual to service our readers in the 120 other countries not enjoying back to school barbecues and suchlike…

Public Markets

DB1 Completes Sale Of Treasury Shares As Part Of Financing Of The 360T Acquisition

DB1 has successfully completed the placement of 2,475,248 treasury shares, thereby raising a total amount of 200 million Euro. The placement was carried out through an accelerated bookbuild offering to institutional investors only. Settlement of the offering is expected to take place on 8 September 2015. Following the sale, the number of shares outstanding will amount to 186,724,086.

Read our Premium 360T Deal Brief.


Sarao Allegedly Wanted To ‘Spoof’ Markets (subscription)
Gina Chon – Financial Times

Navinder Singh Sarao discussed in emails his desire to “spoof” the markets and joked that everyone else was “breaking all the rules”, according to a US indictment unsealed on Thursday that provides new details about market manipulation allegations against him.

Read in Premium The Kennel – Premium discussion of the “Hound of Hounslow”.

PLY: Sarao is clearly the sort of chap who would never admit to being LBW (NB for ‘cousins’ celebrating Labor Day: the kind of man who provoked the infield fly rule). The Hound ought to have been weeded out much earlier by surveillance. That he wasn’t is a disappointment and needs to be attended to. However, it still doesn’t make him a master criminal. He clearly is being set up to be the ‘fall guy’ for American judicial media purposes.


EU Regulators Consult On Compromise In Derivatives Spat With U.S.
Huw Jones – Reuters

The EU has signaled that one of its key rules for regulating financial derivatives could be aligned with U.S. practice to help to end a lengthy dispute that risks fragmenting the $630 trillion market.

EU Targets Listing, Insolvency Rules In Capital Markets Plan

The EU’s executive will propose “radical” changes to make listing on stock markets cheaper, consider pan-EU pension products, and streamline the bloc’s patchwork of insolvency rules.

Read our Premium EU CMU Brief.

PLY: The big problem with this whole process is it requires broad deregulation and the essentially Socialist states of Europe react badly to this while the corporate Socialist EU struggles to understand that less exacting standards actually help growth, they are not a ‘lowering of standards’ per se. Clearly CMU must succeed as the EU is already in crisis on multiple grounds and growth has just been downgraded again to the point where a pulse will be barely visible through 2019 it seems, according the ECB who are about to double down again on QE.

A Basic primer to CMU starts here in Premium: The Beauty of Capital Market Union


As Sebi-FMC Merger Looms, Bourse-Listing System Amiss
Jayshree P Upadhyay – Business Standard

Sebi will soon have to put in place a framework for listing of stock exchanges, an idea that has been awaiting final approval of the market regulator for the past three years. This is because the country’s only listed bourse, MCX, will de facto be listed under Sebi regulations, once the merger between the market regulator and commodity market regulator gets consummated on September 28.

According to sources, Sebi is likely to put in place an enabling framework for listing of stock exchanges, a move that will pave the way for listing of the BSE.

Read our Premium SEBI-FMC Merger Brief.

PLY: Clearly a sensible framework as Indian exchanges must have the ability to be listed and the historic error which was the Jalan Committee must be overcome and Indian markets be allowed to enter the capitalist, free market world with the optionality of listing themselves without burdensome regulatory fiat.


Russia Mimics Euroclear With China Market Link As Ties Grow
Vladimir Kuznetsov & Anna Andrianova – Bloomberg

Russia and China are working on an eastern equivalent to Euroclear Bank’s bond, stock and currency settlement services as they seek to boost two-way investment in their markets.

PLY: Wow, wow and thrice wow. This is moderately tectonic and a clear example of how the Obama doctrine has finally pushed too far on the concept of US dollar clearing that the emerging world is giving up on the notion of routing to the antiquated Swift-ian flat earth of the west. That the US banking system, SWIFT et al is programmed in a language that predates pretty much every Russo-Chinese computer programmer naturally makes them ideally placed to leapfrog the de facto copper cable phase of punch card legacy banking systems.


Taiwan SE Keen To Explore Stock Trading Link With Malaysia

Taiwan SE is open to exploring setting up a stock-trading link with Malaysia if the Southeast Asian nation’s stock exchange is interested.

Read our Premium Taiwan SE Cross Trading Links Brief.

Private Markets

Irish SE €6.2m Profit For 2014

Pre-tax profits of €6.2m for 2014, revenues €24.9m up 9%

PLY: Dublin continues to bounce back after the property bubble burst, with good numbers from ISE under the excellent stewardship of CEO Deirdre Somers.


NSE Files Its Reply In Money Life Case
N Sundaresha Subramanian – Business Standard

As reported in July, after Moneylife’s report that a few investors had fixed the HFT or algo based trading in the National SE (NSE) and thereby jeopardised the interest of retail investors, the exchange filed a defamation case against the magazine with a claim of Rs 100 crore (USD 15.7 mln).


NSE Seals Pact With Stock Exchange Of Mauritius For Synergy
The Economic Times

National SE (NSE) formalised a MoU with the Stock Exchange of Mauritius (SEM) to facilitate co-operation between the two exchanges.

PLY: A very sensible approach given that Mauritius is a huge gateway of funding to India through locally structured vehicles on the island. For once an MOU with some viable USP.


Four Months In, TruMid Discusses Credit Trading Platform (subscription)
Waters Technology

Mike Sobel, managing partner at TruMid, gives Waters an update on the company’s trading platform after four months of early activity. On April 29, TruMid went live with its electronic corporate bond trading venue. The new entrant in the space is interesting because it features elements of a dark pool but also provides session-based trading.

Read our Premium The Bond Platforms Rush Brief – Part 2.

Special Section: FTI, NSEL, India at the Crossroads

PLY: Downday for the Indian markets with MCX worse than the average at -4% and the 63 Moons (ex-FTIL) business off 9%.


PFS Opposes IEX’s Proposed Rs 108 Crore Tech Deal With FTIL
Arun Kumar – The Economic Times

PTC India Financial Services (PFS), one of the founders of the Indian Energy Exchange (IEX), has opposed the exchange’s plan to purchase the trading platform technology (reported this week) it relies on from FTIL for Rs 108 crore (USD 16.3 mln).

PLY: Signs of coherent life within the IEX structure! PTC sensibly smells a dire deal and speaks out. Quite right too! QV the Premium post Technology On The Edge.


All-Night Push After Glitch Hit BNY Mellon (subscription)
Kirsten Grind – Wall Street Journal

At the height of the market volatility on Aug. 24, executives at BNY Mellon got the news they wanted to hear: A glitch affecting the system that keeps more than a thousand mutual funds running was likely to be fixed soon. BNY Mellon relayed the news to some clients.

But the problem was far from over.

PLY: Festering fiasco. Forty years of excellence broadly squandered in one week of chaos – wonder how FIS feel about their acquisition of Sungard now? Can’t say the brand of BNY Mellon has done anything but plummet either. Very sad all round.


UBS Looks To Build ‘Settlement Coin’ Alliance (subscription)
Financial News

Swiss bank to approach rivals to catapult bitcoin-type technology into the financial mainstream.

PLY: Unsurprising. The issue now is, will we see an interbank system or a neutral system come to prominence. It strikes me regulators will not be minded to let the banks run everything, at least in the US where antitrust is taken seriously. However this is only the beginning of the story. The Blockchain opportunity is vast – and whether you believe me or not you need to be at Young Markets where we will continue our discussions of previous years with a fascinating dive into some of the things happening in the field…


CME Successfully Completes First Multilateral Compression Cycle Using TriOptima’s triReduce Service

Nine CME IRS clearing members participated in the cycle, which compressed $2.2 trillion in gross notional, resulting in a reduction of 44,933 line items and an additional 6,900 line items partially terminated. Multilateral compression further enhances CME’s compression offering, including Compression via Coupon Blending, which has already reduced total notional by more than $11 trillion and total line items by more than 180,000.

PLY: TriOptima, remains a great business whose every reduction brings joy to the hearts of anybody passionate about making better markets.


LSEG & Boat To Build MiFID II Trade Reporting Solution
Automated Trader

Boat Services and LSE announced the signing of Heads of Terms to build a MiFID II compliant trade reporting service. The new service will offer customers a single, multi-asset, pan-European reporting solution to help them meet their real-time MiFID II trade reporting obligations.

The new service will bring together LSE and Boat Services’ existing MiFID compliant trade reporting services and will complement LSE’s T+1 MiFID and EMIR transaction reporting services, offered through UnaVista. LSE will apply for Authorised Publication Arrangement (APA) status to facilitate Systematic Internaliser and OTC reporting, replacing current Trade Data Monitor (TDM) status.

PLY: Good move, ought to be a ‘win win’ for Cinnober BOAT and LSE.


LCH.Clearnet Plans FRA Compression Next Month
Luke Jeffs – FOW

It’s Official: This Summer Was Busiest Ever for Treasury Trading
Alexandra Scaggs – Bloomberg

Thanks to volatile global markets and a shifting outlook for interest rates, there was more trading during the period on ICAP’s electronic BrokerTec system than any corresponding stretch in its 15-year history. Humans and computers have been hustling to react after the Greek debt crisis came to a head and China’s currency devaluation sparked a rout in equities.

PLY: Let me see now, incredibly low yields, vast issuance, huge secondary volumes with the yield curve remarkably compressed and also suffering the effects of massive QE. Can anybody see what happens next?

…if you answered “dozens of upstart platforms enter the market and generate vast profits” I am not sure we’re viewing this from the same angle.

Career Paths

The BoD of Lahore SE (LSE) has unanimously elected Mr. Muhammad Naeem as Chairman.

Financial Calendar

04.09.2015 – Record date CBOE $0.23 dividend

04.09.2015 – TMX $0.40 dividend payment

04.09.2015 – BGC Partners’ BoD $0.14 quarterly dividend payment

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

Share Notes

Interactive Brokers Vice Chairman Earl H. Nemser sold 2,591 shares Wednesday, September 2nd at $38.04 (bargain $98,561.64).

Check our Share Notes page in Premium.

Analyst Notes

Betfair “Reduce” Rating Reiterated At Numis Securities – GBX 2100 Target Price

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


Crowdcube Becomes First Equity-Based Crowdfunding Platform To Hit £100m
Daniel Farey-Jones – Marketing Magazine

PLY: …And huge plaudits one and all!

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