12 min read

066 Exchange Invest weekly Podcast October 10th 2020

As finance minister Taro Aso told reporters in Tokyo “exchanges are a crucial part of market infrastructure and it's unacceptable that trading opportunities were denied.”


Out East: Tokyo stock exchange, recovering from their network collapse, losing a day's trading while over at NASDAQ, they're saying, for trading: go West.

My name is Patrick L. Young. Welcome to the bourse business, weekly digest. It's the Exchange Invest Weekly Podcast.

Good day, ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the week in market structure. All the analysis of the weeks, many events and happenings can be found in Exchange Invest’s daily subscriber newsletter: the unique guide to the bourse business, sent daily to your inbox. More details for subscriptions and a free trial at ExchangeInvest.com.

The Jersey tax spat exploded this one week, amongst all manner of threats that they were on their way to Chicago... The media was excited and intrigued at that Midwestern move.

...Whereas in reality, the truth came out later in the week:”Go West!” say NASDAQ; they're in talks with Texas Governor Abbott about relocating their trading systems in a mega move, to the Dallas Fort Worth area. As I noted when this whole farago first started, the rich opportunity for NASDAQ and US trading venues is to go West far, far West, from New Jersey in the Tristate area.

Find a stable, low tax environment. Tick, Texas maintain a 0% state income tax affirmed indeed by a referendum last year, they have a proven business environment and indeed ‘Bob may be your father's brother subject only to the usual statements of gender recognition, gender determination, equal relationship status, and so forth.’

I'm delighted to hear NASDAQ are examining their options, as doubtless are other venues with a view to a next gen situation, which will clearly diminish the New York area’s  financial center status. And that all comes at a time when I hear talk of new International Financial Centers in many locales, including perhaps not that far from NASDAQ's current center of attention, according to this week's reports.

Meanwhile, the mot juste of the week comes from NASDAQ's communications, VP, Joe, Christinat: Referring to NASDAQ:

“We are assessing all our options, but our number one priority is protecting the U S capital markets and its investors.”

Amen to tha:t go West the Tristate may yet remove the current tax threat, but their fiscal base is already eroding. It's only a matter of time before they return to any tax they possibly can. The same goes for Illinois. Hence the message of the week is: “Go West!” ...and indeed Charles Schwab: They're on the verge of completing their TD Ameritrade acquisition and it's time for them to Chuck the West coast too... another heaven of bankrupt us state government, Charles Schwab expects Westlake in Texas to become their official corporate headquarters address from January the first 2021.

In other bad news for New York, Thomson Reuters, they're looking to sell their 50% stake in their Times Square headquarters at the epicenter of New York's Manhattan district. It's not so long ago that Reuters was moving that headquarters to be in New York City from London, as that seemed to be the epicenter of the world, then.

Of course, it worked for the then CEO and his acolytes, I suppose. But now that dream appears to be dying along, sadly with a great city, which is in real difficulty, after an absence of budgetary coherence, even before COVID hit the city hard.

In deals this week, lots and lots of rumors: the European union are trying to maximize the stress of the LSE. They're about to be told sometime soon, coming soon, minor attractions next season - who knows - somewhere over the horizon: We won't be singing at the LSE in Paternoster square. I imagine there'll be looking to the antitrust objections they're going to get over there.  what they are, who knows, but they are apparently according to leaks from Brussels looming.

Elsewhere. NYSHEX,  that's a shipping and transportation exchange. They raised $13.5 million in additional growth financing to expand their offering for shippers across the United States of America and beyond.

Meanwhile, the ramifications continued over TP ICAP’s Ill-advised discussions about acquiring the block trading provider of equity markets, Liquidnet.

However this ultimately plays out, indeed. Whether the TPICAP board actually wishes to go ahead with the bid, let alone, if a bid can be agreed, let alone. If the shareholders of TPI CAP agree to what is going to be a further diluted and value destructive move to their already bruised shares. It's clear that confidence in Nicholas Breteau the CEO of TPI CAP and his executives.

[00:06:09] Has an eye already surely descended to a level that cannot be deemed career sustaining the prospect of acquiring Liquidnet by TPI CAP amongst the balance sheet, toxic stupidity of the first order by a company with a sorry, track record of shareholder value destruction. In recent years, TPI cup professors, the prospect of suicide by deal or losing its management.

The latter have demonstrably failed. And indeed there must surely be questions swirling of what the senior NED element knew even to suggest this deal in the public demand. As a credible negotiation has left TP ICAP rightly open to ridicule, and indeed clearly showing the company has no idea what to do to improve what is a flawed business model badly executed with no modernization strategy.

In new markets this week, two interesting, slightly left field plays: Venezuela. They've rolled out an ethereum based - that's a blockchain/  cryptocurrency - Stock exchange that's to help skirt U S sanctions. Elsewhere, the world's first high-frequency decentralized energy market is helping drive the port of Rotterdam’s energy provision.

It's been jointly developed by S and P global Platts and Blocklab. It's a new micro grid, electricity trading platform, leveraging - oh! -l a great many passwords, blockchain, artificial intelligence, you name it. This thing is definitely a buzzword bingo card of technological development.

Now, if you don't know one end of a technological development, buzzword bingo card from another, but you have appreciated that COVID-19 is a killer.

Then you will be aware of the fact that COVID-19 might kill your career, but indeed FinTech more than certainly is going to destroy your business at some stage in the near future. It's a Victory Or Death world of risk or opportunity. Therefore 20 years on from the excitement of my original FinTech bestseller Capital Market Revolution.

I Patrick L Young invite you to purchase the new tome trio death, blockchain cryptocurrency, FinTech world. It's an easy read, explaining the differing and diverging role of banks and extensions explaining the winning business models of the new world order and places and perspective. Just what Bitcoin, blockchain and cryptocurrency mean for markets.

It's a binary world. Your career will sustain or collapse in the next stage of the digital world. Hence the title victory or death, lest you need reminding of the exciting times for finance on your career in which we are living victory or death is published by DV books and is distributed by Ingram worldwide.

Meanwhile, don't forget to check in Tuesdays to our live stream available of course, as. an online video cast on all other days. It's the IPO-Vid live stream. You can catch the back issues at IPO-Vid on the live stream Tuesdays at 6:00 PM. London time, 1300 hours, New York time available on LinkedIn, Facebook, and indeed YouTube.

Over in crypto land this week, the CFTC, the American federal crackdown on the crypto exchanges became much, much more of a reality BitMex: The owners of that legacy exchange have been charged with illegally operating a cryptocurrency derivatives trading platform and various violations of anti money laundering laws.

A period in the orange jumpsuit fraternity looks to be looming for a series of pioneers in the cryptocurrency marketplace. I've long mused that the first wave of these cryptocurrency markets would end with the initial bubble survivors in a collective group, referred to as “the accused.” That seems to be playing out now.

And likewise, I suspect COVID caused a slow down in what I was pretty convinced would  be a U S Fed lockdown of the crypto kiddies during Q1 this year. Orange jumpsuits all round by the looks of it. And frankly, not a moment too soon. Elsewhere, various people were pondering the death of the marketplaces in crypto.

Apparently some 75 crypto exchanges have died already in 2020. More will clearly follow: indeed I'm minded to ponder: only 75 dead so far!? Compare that against the People's Bank of China: their digital currency has already been used for transactions worth 1.1 billion Chinese Yuan.

Product news this week: the UK’s watch dogs; they've been telling markets, prepare for libor’s demise. Globally the blob are standing in front of their mirrors each morning, reciting a new rendition of the famous Monty Python sketch. “This is a dead libor. It has ceased to be novated margined or settled... bereft of counterparties. It has gone to meet its maker, et cetera, et cetera.”

Actually, if you want to catch up with some of the interesting discussions about the short term interest rate world, look to IPO-VID double 008. This week, we were talking to Andy Ross, the CEO of the CurveGlobal enterprise. That's a platform, an exchange, looking to revolutionize short term interest rate trading based under the organization, the aegis of the London Stock Exchange Group.

Fascinating discussion all round with Andy Ross there, you can catch it online Youtube IPO-VID.

Ultra big influx of money into Hong Kong. Hong Kong deposits surged by some US $50 billion during August alone on what is now the Hong Kong exchange’s IPO magnet. That of course, coming ahead of the Ant financial IPO, which we're looking forward to being the biggest IPO of all time in the coming weeks.

Elsewhere the Options Clearing Corporation, they've already announced a new exchange listed options, industry volume record, and that's based only on the data up to the end of September, 2020. Think of what they'll manage by the time we get a whole extra quarter in on the year.

ICE Benchmark Administration, they've launched a beta version of the British Pound, Sonia ICE swap rate. Fascinating stuff there for the post libor universe…

and NASDAQ, they've launched VOLQ the next generation index, which is, I believe going to replace the rather aged and less accurate ViX in the near future for all those people who are mavens on trading, what goes on in the world of volatility.

Finally on product news this week, while the German stock exchange is proposing tougher rules after the Wirecard scandal, which could of course proved to be a poisoned chalice, precisely because they have a tendency to overregulate when there's nobody willing to put their career on the line to save anything around at DB1 QV remember what happened to the Neuer Markt in the fiasco after the.com bubble collapsed. Deutsche Boerse are also proposing expanding their DAX 30 index to 40 companies. I suppose that provides extra diversification for the index when one of your members happens to be something like Wirecard and goes bust unexpectedly as a result of a monumental fraud, hidden in plain sight in what might be referred to as Germany's somewhat quixotic corporate culture.

Technology News this week was entirely dominated by the Tokyo stock exchanges’ collapse: a failure in a Fujitsu system has led to a great deal of bowing, scraping, the forming of a committee and vast outrage as Tokyo's financial hub definitively lost fierce in its worst outage ever with no trading whatsoever for one whole day last week.

As finance minister Taro Aso told reporters in Tokyo “exchanges are a crucial part of market infrastructure and it's unacceptable that trading opportunities were denied.”

In regulatory news. Yeah. Well, while the OCC  announced record volumes in options trading the CFTC, the commodity futures trading commission, their regulators have posted a record breaking enforcement year and that's without even trying to crack down on exchange failures, such as the West Texas intermediate Cushing crisis at the CME earlier this year.

Elsewhere the UK confirmed their ban on Bitcoin based products for retail investors while I'm never inclined to endorse the myopic analog era bands of the FCA, they simply drive business under grind. Me thinks this is a clear reaction to what is a highly dubious clutch of crypto derivatives extensions, which offer none of the CCP protection at all, compared to the mainstream legacy forces.

QV of course, the BitMex arrests this week in the USA, frankly, crypto looks sleazy despite the daily inbox. Well, sure of investment grade markets with press releases coming from water often. So probably quite sleazy entities themselves. There are exceptions, of course, but they are by definition rare in the crypto exchange marketplace at the same time, the argument of the FCA that because people lose money in the product set, thus it must be banned is either frankly moronic or inspired genius, QV

Most supporters see their football teams lose more often than they win over any prolonged period. Does that mean we can bound soccer to save supporters their pain?

One big name, move in. People news this week, Cees Vermaas he's formerly the head of Euronext Amsterdam. He dived into that situation just ahead of the IPO, when it was being divested by ICE all those years ago, he then joined CME Europe to become the CEO of their short-lived futures exchange. And now he's going to be moving to Guernsey in the channel islands off the coast of the UK and France to become the CEO of the dynamic small listings venue, the international stock exchange, formerly of course the channel islands stock exchange, all the very, very, very best to start AGAIN, all the very, very best to Cees, a likeable Dutchman, who is the first parish veteran CEO that the international stock exchange group has had in its relatively brief, but dynamic history. Gentlemen, we end  a very brief review of what's going on and another busy week in markets. As I said, if you want to know all the stories, then you need to be emailing me, Patrick L.

Young, find me on LinkedIn or elsewhere, or go to the ExchangeInvest.com website and apply for a free trial in order that you can read, Exchange Invest the daily market newsletter. - The only bourse  business digest and indeed the bourse business digest that can keep you often weeks ahead of the news and analysis of what's going on in the markets,

However, before I leave you this week, ladies and gentlemen, one macro story struck us this week. The European Union is pinning its hopes on markets to absorb the bank loans hit by Coronavirus. The hail Mary pass of the European Union economies from central banks and regulatory authorities looks to be the growing order of the foreseeable future. And on that mysterious and magnificent note, ladies and gentlemen, my name is Patrick L. Young. I wish you a great week in markets. I hope to catch up with you via the pages of our daily email newsletter Exchange Invest during the week. But if not, we'll be back next week with another Exchange Invest Weekly Podcast, have a great week in markets.


US Market Could Benefit If Exchanges Exit New Jersey In Tax Spat

Nasdaq Inc. In Talks With Texas Gov. Abbott About Relocating Trading Systems To Dallas-Fort Worth, Sources Say
The Dallas Morning News

Thomson Reuters Looks To Sell Stake In Times Square Hq
The Real Deal

Thomson Reuters Considering Sale Of Times Square Office Tower

LSE To Be Told About EU's Refinitiv Deal Concerns, Sources Say

LSE Set To Get EU Antitrust Objections Over Refinitiv Deal
Yahoo Finance

Charles Schwab Set To Close Its $26 Billion Deal For TD Ameritrade Next Week
The Dallas Morning News

NYSHEX Raises New Funds To Progress Harmony Between Shippers And Carriers

NYSHEX Raises $13.5 Million In Additional Growth Financing To Expand Offering To Shippers
American Journal of Transportation

NYSHEX , Carriers Push For More Binding Ocean Shipping Contracts
Hellenic Shipping News Worldwide

TP ICAP's Answer When The Phones Stopped Ringing? Buy Liquidnet
Financial News

Venezuela Rolls Out Ethereum-Based Stock Exchange To Help Skirt US Sanctions

World's First High-Frequency Decentralized Energy Market Helps Drive Port Of Rotterdam's Energy ...

CFTC Charges BitMEX Owners with Illegally Operating a Cryptocurrency Derivatives Trading Platform and Anti-Money Laundering Violations

CFTC Charges Bitmex With Illegally Operating Derivatives Exchange

Cryptowisser: 75 Crypto Exchanges Dead In 2020: More Will Follow
Bitcoin News

PBOC’s Digital Currency Used For Transactions Worth 1.1 Billion Yuan
South China Morning Post

UK Watchdog Tells Markets To Prepare For Libor's Demise

(catch up with AndyRoss… IPO-VID 008)

Hong Kong Bank Deposits Surge By Us$50 Billion In August On IPO Magnet HKMA Forced To Intervene To Weaken Currency 15 Times In September As Hot Money Chases Hot Chinese IPOs, Secondary Listings In The City.
South China Morning Post

OCC Clears New Annual Exchange -Listed Options Industry Volume Record - September 2020

ICE Benchmark Administration Launches Beta Version of GBP SONIA ICE Swap Rate®

Nasdaq VOLQ Launches: The Next Generation Index Trades On CME

Deutsche Boerse Proposes Expanding Dax To 40 Companies

Germany's Stock Exchange Proposes Tougher Rules After Wirecard Scandal
Yahoo Finance

Tokyo Stock Exchange Outage Puts Spotlight On Fujitsu System
Yahoo Finance Australia

Tokyo Stock Exchange Resumes Trading After Technical Outage
Japan Today

Japan's Tocom Shrugs Off Stock Exchange Closure
Argus Media

Exchange Outage Is Latest Blow To Tokyo'S Financial Hub Dreams

Tokyo Stock Exchange Suffers Its Worst Outage Ever

Tokyo Stock Exchange Suspends Day's Trade After Worst-Ever System Glitch

Trading Halted On The Tokyo Stock Exchange Due To A Network Issue
The Japan Times

How One Piece Of Hardware Took Down A $6 Trillion Stock Market

Fujitsu Chief Apologizes For Tokyo Stock Exchange Glitch, Vowing Probe
The Japan Times

Fujitsu Still Investigating Causes Of Tokyo Stock Bourse Outage

CFTC Posts Record-Breaking Enforcement Year

UK Watchdog Bans Bitcoin-Based Products For Retail Investors

UK Financial Conduct Authority Bans The Sale Of Crypto-Derivatives To Retail Consumers

Cees Vermaas Appointed CEO of The International Stock Exchange (TISE)

EU Pins Hopes On Markets To Absorb Bank Loans Hit By Coronavirus