This week in the parish of bourses and market structure: Mega shock: Ant IPO raises the most in history and is then cancelled 48 hours before the first trades, after Chinese regulatory intervention. My name is Patrick L. Young. Welcome to the Bourse Business Weekly digest. It's the Exchange invest weekly podcast.
The stormy seas of Brexit remain with the EU regulators seeking to control trade from the bloc to the world's largest financial center - and now the EU’s deadly rival - London. First, the European Union, outlined their usual notion of prescriptive restrictions, and then London upset the applecart by being laissez Faire free marketeers with the customer's best interests a forethought.
This - to Brussels, an entirely alien notion of customer best execution - has created a perfect storm. The UK fundamentally believes in free trade and growing the pie. The European union believes in managed decline, protectionism.
How it took that long to drive that dichotomy to Brexit is a separate issue. However, the European Union are left looking spiteful and silly as a result of their attempts to protect their market while the EU financial center encourages genuine best execution in the interests of investors.
As the FCA head of international, Nausicaa Delfas noted.
“While we note ESMA’S recent clarifications to reduce the potential overlap of an EU and UK securities trading obligation. We chose this simple armed, comprehensive approach rather than replicate restrictions based on the jurisdictions of the share issue or the currency in which the shares issued.”
The naked stupidity of the EU is obvious, ladies and gentlemen... and investors actions will reflect the UK open market stance over the long term.
It was a wildly busy week for results in the parish. All the deals were in Exchange Invest daily newsletter, no person can afford to be without it in capital markets and market structure. For the sake of this podcast, let's look at some edited highlights from the first to the last excellent parish results.
...Well provided you bookend them around the period after NASDAQ and before ICE for in the middle, there was mediocrity. That ICE “excellence as usual” report could be blithely dismissed as typical of their superior management structure, but they deserve the plaudits to be sung from the rooftops. Team ICE consistently excels as others - at best - stagnate.
If the others can't improve their game to compete with ICE, or indeed the Adena era NASDAQ, then the parish will look markedly different in three years' time. Certainly what were once strutting predators, now look more like simpering prey. If only antitrust would acquiesce.
Some results this week, also from CBOE, TMX, and even Dar Es Salaam, the latter capitalizing on election year volatility amongst other factors in their first nine months of 2020.
Now most results are in we can easily divide the parish in two, not by market cap of operating company as per Young's pyramid, but by management aptitude.
Thus, we have the category of “they get it” led by NASDAQ and ICE who demonstrate rigorous strategic customer centric, shareholder centric management. Then we have all the others championed by CME and DB1 - alas - but also including the lackluster London Stock Exchange Group, more who demonstrate C-suites more in the throes of rigor mortis.
There is no single Holy grail to grasp the plot as the diverging approaches of ICE and NASDAQ show. But as it's becoming clearer, by the day, there are a wide range of ways to lose the plot, including variations, such as “milking the monopoly,” “seeking career stability to retirement” And “I'm sure the job spec said, run, a deal driven acquisition fund.” A fourth “Hey, we always did it this way. Why change now?” is particularly pervasive the further one goes down the pyramid.
Lessons in revolution are available on request for anyone keen to listen and engage the services of myself via Exchange Invest.
in deals this week, the results of the LSEG extraordinary general meeting took place. LSEG will divest Borsa. Italiana, presuming that is, the European union's antitrust stop at this multi kilo offering of flesh without demanding a few pounds more. If they do that, then the deal may be off.
London. Stock Exchange Group also had an embarrassing conflict of interest to address this week, which was sitting in plain sight.
Messrs Barclay's - how Typical. It should happen to be Barclays in this again:, happened to have been advising LSEG on the Benefits of their deal simultaneously advising Euronext on how to actually fund the same deal. It's embarrassing when the stewards of the markets prove so hapless.
Ladies and gentlemen, don't forget, check in and buy yourself a copy of Victory Or Death. The book that will explain to you the future of markets, the future of technology and the future of FinTech in a world of Blockchain cryptocurrency and indeed that all pervasive global FinTech movement, written by myself, Patrick L. Young, it's a followup to the original FinTech bestseller “Capital Market Revolution!” of 1999. It's a binary world. Your career will sustain or collapse in the next stage of digital development. Hence the title Victory Or Death.
Victory Or Death is published by DV books and is distributed by Ingram worldwide.
Meanwhile, while you're waiting for your copy of that to arrive, drop by YouTube and search IPO-VID, that's where you can find our multiplicity of live streams recorded for posterity, including recent excellent shows with the likes of Alasdair Haynes, the CEO of Aquis. Coming up on Tuesday, we have one of the original flash boys: IEX co-funder Ronan Ryan.
You can tune in on the live stream via Facebook. LinkedIn and YouTube
In crypto land this week is Binance trying to duck US regulations? Some scary accusations appearing that there may have been some form of whiteboarding of a methodology to avoid regulation, which Binance are stringently denying. Nonetheless, we can't escape the fact that once again, another center of the Binance empire has closed down its physical office.
Binance Uganda their African arm is the latest operation to mysteriously disappear, leaving yet more questions concerning the actual location of what might be termed the Scarlet Pimpernel of crypto bourses.
In Hong Kong they had a FinTech week which allowed the Hong Kong authorities to immediately bring down the boom on cryptocurrencies with a trading ban on retail and a demand that all cryptocurrency platforms be regulated henceforth.
Equally, the Hong Kong Monetary Authority, the stewards of the Hong Kong dollar are working with regional central banks on a series of central bank, digital currencies.
To product news. Ant Financial, the world's largest IPO that never walls. They're now refunding some $167.7 billion to investors. After some $3 trillion was chasing investment in the group.
The group’s IPO was suspended, only 48 hours before first trades were due to happen. The IPO suspension came after financial. Regulators in China signaled their intention to tighten the regulatory requirements on online consumer loans, building on their previous activities in the P2P sector, which also of course involves this micro lending segment.
As the smoke clears it appears Ant can look forward to being regulated more as a thin, or if an Angela entity thanks to its de facto loan origination than the less regulated FinTech pundits are initially reckoning that will affect.
Evaluation ahead of a next attempt at listing. I disagree. Presuming ceteris paribus market and economic conditions. I reckon Ant comes back at the same or a higher multiple, because regulatory clarity will be prized by institutional investors on the company's growth trajectory remains simply spectacular.
What we know is that Ant has 4% of the SME and consumer loan market in China. Loans can be granted in three minutes with zero human intervention. The business services 80 million different SMEs with the aim of doubling that number: 160 million companies in China by 2025. At that stage, they believe digital payments will be a $61 trillion marketplace.
17.7 billion US dollars in revenue for the first nine months of 2020, which was up 43% year on year and 95.6% of that coming from mainland China. There's a net profit expectation of 8.34 billion US dollars in 2021.
It's unsurprising that the market fell out of bed in Hong Kong, whether it was for the stock of Alibaba or related e-commerce stocks.
However, looking to the long term, this unprecedented intervention, just 48 hours ahead of first dealings, cancelling a listing, which after all had only been given permission a few weeks earlier by Chinese authorities.
Nonetheless, I suspect we'll end up having a very silver lining to the cloud in due course as Ant financial reorganizes, regroups, and comes out a regulated, but more powerful entity still.
In technology news this week. Well trading and warrants across Europe network was halted for an hour, just two weeks after that entirely chaotic day, which disrupted trading across equities and left Euronext on the ability to discern buys from sales for some period of time.
Given the fact that they're moving Borsa Italiana onto their optic system- Presuming they close the deal with London Stock Exchange Group - then the ultimate platform is about to move on to the Euronext system, eminently Euronext is burning through technical logical credibility for what was once a respected and reliable provider, just as it continues to onboard these new acquisitions while the core system itself appears to be suffering frustrating boats of unreliability. Worrying times for the operations of the Euronext group.
Over in regulation news this week, many people, including ESMA the European regulator, getting very, very vexed by Wirecard and quite right too! The German regulators’ behavior. throughout this fraudulent shambles has been a total fiasco.
Jobs this week, the Abu Dhabi securities exchange. They have appointed a new CEO Saeed Hamad Obaid Al Dhaheri, who has a very strong pedigree in the local Abu Dhabi market. Albeit not so far in the parish of exchanges. However, it's all change at ADX, a new chairman last month, and now a new CEO, suggests some interesting new dynamism to the Emirati market.
Elsewhere. Great news from the USA, Senator Kelly Loeffler, a former doyenne of the parish, the Bakkt CEO and the original powerhouse of Comms, Investor Relations and marketing at ICE will be taking part in a January runoff for her Senate seat in Georgia.
Let's end this week with a quick yield curve update: three quarters of Eurozone government bonds: A record high - now have sub zero yields. On that mysterious and magnificent note, ladies and gentlemen, thank you for joining this number. 0 seven 0 of the Exchange Invest Weekly Podcast canon with myself, Patrick L. Young: Have a great week in markets. And if you're craving the news and information in the meantime, don't forget to check out our daily newsletter Exchange Invest Daily.
TMX Group Limited Reports Results For Third Quarter 2020
Dar Es Salaam Stock Exchange (Dse.Tz) Q32020 Interim Report
Binance Uganda Shutting Down
Hong Kong Working With Regional Central Banks On Digital Currencies
South China Morning Post
Hong Kong Brings Down The Boom On Cryptocurrencies With Trading Ban
South China Morning Post
Ant’s IPO Delay Leaves Five Mutual Funds With US$9 Billion In Limbo
South China Morning Post
What’s Next For Ant Group After Regulators Put Its IPO On Ice
South China Morning Post
Wirecard Abuse Review By ESMA Reveals Significant Failures And Conflicts Of Interests In National Financial Supervision And The Need For Effective Collective Redress For Abused Investors