Jan 29, 2022 11 min read Exchange Invest Weekly Podcast

129 Exchange Invest Weekly Podcast January 29th, 2022

Global Futures and Options Trading hit another record in 2021 went the Futures Industry Association headline. A total volume of trading reached 62.58 billion contracts

Transcript:

This week in the parish of bourses and market structure:

Exchange-Traded Derivatives boom again in 2021.

Adena Friedman notes a strong NASDAQ IPO pipeline.

Matt Chamberlain, the LME CEO makes a Crypto Gamble and as a new CEO for the Greek Stock Exchange, while Indian power IEX results rock.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It's the Exchange Invest Weekly Podcast Episode 129.

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 many events of the past seven days can be found in Exchange Invest’s daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.

More details at ExchangeInvest.com.

Global Futures and Options Trading hit another record in 2021 went the Futures Industry Association headline. A total volume of trading reached 62.58 billion contracts (that's up 33.7% year-on-year) futures trading up 14.6%, options trading and mega options year up 56.6%. And I suspect there's a lot more potential to come. Just in case you thought the CME was a market leader (with an annual volume expansion of 2.5%) along comes the annual FIA survey to remind us that serious growth is everywhere else.

The National Stock Exchange of India may be the biggest Exchange Traded volume exchange for the third year in a row but even ICE (Intercontinental Exchange) and NASDAQ embarrass the CME with growth 10x that of the Chicago monopolist. Is 2022 the year of a CME rerating? Or might be there yet proved to be some irritation amongst a broadly supine shareholder base?

Options were the big winner in 2021 and I think that trend fuelled by generational adoption is only going to continue in 2022, albeit the stock market bull in the US et al has been helping this volume enormously.

One big broker helped enormously by that volume is of course Charles Schwab, the Charles Schwab CEO, according to a Bloomberg headline sees a brokerage of the future looking more like Uber. AKA as anybody who has seen my presentation on the topic knows or has read “Victory or Death”, my latest tome, the Charles Schwab CEO sees a brokerage looking more like an exchange.

The NASDAQ IPO pipeline is ‘Incredibly Strong’, said Adena Friedman, the CEO of NASDAQ this week, while there was a must-read article via LinkedIn, rather a tedious title but worth reading if you're interested into the nuts and bolts of settlement by Paul Conn of Computershare, Who Can Legally Issue Shares In A Public Listed Company?.

A little bit of news this week from my own home turf Valereum, which was last week, Valereum blockchain, the name has been changed to Valereum PLC as a result of a unanimous EGM vote during the course of the past week. The new website is Valereum.gi and the new Twitter handle is @ValareumPLC and in fact, it marked last week also six months to the day on the 21st of January that I joined Valereum PLC as Executive Director. The opportunity was a fantastic and fascinating one as presented and some 180 or so days later, at least some of the strategy is becoming apparent as we wrestle with the usual issues of delivering market news as a private company. Our biggest news was the deal to acquire the Gibraltar Stock Exchange, we have an option for 80% and the work to settle that transaction is ongoing. Thus, behind the scenes, it has been a fabulously hectic whirlwind of activity.

Over in Sri Lanka, the Securities Exchange Commission there and the Colombo Stock Exchange, they have begun the project to establish a central counterparty clearing system. Meanwhile, Aver which claims to be the world's first fully decentralized Web 3 betting platform has closed a 7.5 million seed funding round. I wonder how Aver welfare when it comes up against the full force of global regulation.

In Korea, the KRX chief has highlighted the need for a resumption of short selling in full. If the local stock markets aim is to be achieved of being included in the MSCI developed markets index.

Two bright spots in results this week: IHS Markit, they reported their 4th Quarter 2021 figures and surely this must be the final quarter as an independent company. One would expect as we await the merger to go through with S&P Global acquiring IHS Markit. Revenue was up 10% and the diluted EPS were mounted to $1.83 per share. Those numbers look good, but the spectacular winner of the week was the Indian Energy Exchange, it may only have paid a dividend of one rupee, but the star performer of the week was the Indian Energy Exchange, achieving 37% year-on-year volume growth in Q3 of the fiscal year. It achieved even better financial results profit after tax growing to 39% year on year.

In deals yet another busy week for deals in the parish all of them were in Exchange Invest daily, the newsletter no person can afford to be without in capital markets and market structure. For the sake of this podcast, let's look at a couple of edited highlights: PNB in India they may be selling their stake in NCDEX (National Commodity and Derivatives Exchange) in order to free up capital. The Bangladeshi Securities Exchange Commission, they're somewhat vexed or at least concerned about the strategic partner relationship in the Dhaka Stock Exchange, they're looking for a valuation report and information on the strategic partner's contribution. Of course, as we recall at the time of the share price purchase agreement that took place on the 6th of February 2018. This involved investment with a consortium of the Shenzhen and Shanghai Stock Exchanges. The group had offered various technological and financial supports as the strategic investor. Is it another Chinese investment souring in the parish? Certainly, it doesn't look as bad as the mess of the Pakistan Stock Exchange tech upgrade, which had to be reversed when the system proved unfortunately dysfunctional.

The unfortunate dysfunctional is just one of the things that make our modern digital world one of being “Victory or Death”. If you're looking to understand the future of blockchain, cryptocurrency and the FinTech world, then don't forget to pick up my book 20 years on from the excitement of the original FinTech bestseller, “Capital Market Revolution!”. I Patrick L. Young and discussing the future of finance in the tome “Victory or Death” which is published by DV books, and it's distributed by Ingram worldwide. Don't forget while you're waiting for a copy of “Victory or Death” to arrive, you can check out our Livestream, Tuesdays at 6 pm London time at 1 pm New York time, it’s the IPO video live show. You can catch the back episodes on Linked, Facebook and YouTube. On YouTube, it's via IPO-Vid.

Our most recent show was Puro Carbon - Nasdaq Transforming Emissions with the fabulous Fredrik Ekström, the head of ESG at the NASDAQ group in a show co-hosted by my friend Steve Zwick the presenter of the Bionic Planet Podcast. Our next show coming up on Tuesday, we're gonna have “Two Diverse Tech Musketeers” Julia Streets and Eliza Filby will join me for what I'm sure is going to be a fascinating discussion.

In crypto land this week: crypto giant Binance - they kept weak money laundering checks even as they promised tougher compliance documents show - that was a Reuters headline this week, which was something of a must-read. The story would seem to maintain the binary trading possibility that the richest crypto billionaire of all CZ may yet be either enjoying his $100 billion riches in the near future or wearing an orange jumpsuit. Reuters piece together various strands of Biannce’s tale and that's Bianance’s tale of never quite seeming to get itself regulated over a period of several years. Still there was another Reuters report this week: “Islamist attackers suspected accomplices used crypto exchange Binance according to a German police statement”.

Meanwhile, those trailblazers in El Salvador they came under a degree of active encouraged encouragement or perhaps one might say active discouragement If you're a Bitcoin fan. The IMF (International Monetary Fund) the one might say “Teamster” division of the central bankers union have spoken. The IMF urges El Salvador to strip Bitcoin’s legal tender status.

Product news this week: the Tokyo bourse chief has said that SPACS are possible in Japan but only with safeguards. That came in the same week that the United Arab Emirates regulator approved the Gulf's first SPAC framework.

Deutsche Börse and the Guangzhou Futures Exchange, they're going to be launching cooperation on carbon markets via D1’s commodity exchange EEX. The World Economic Forum had an article this week: The World Is Drowning In Data, Why Don't We Trade It Like On A Stock Exchange? The worry for me about headlines like this was, well, if the WEF thinks this is groundbreaking, then clearly the PMC (Professional Managerial Class) is 5 years behind this thinking - at the absolute best - and that thinking is a decade or more behind those of us who actually think about markets.

Nasdaq European Exchanges delivered a stunning record year in 2021 with a press release last week confirming what we've been discussing previously - as a simply scintillating year for the European NASDAQ business in equity listings.

Over in regulation news this week: BaFin was found “Not Liable” for wirecard investors by the Frankfurt District Court. For those who ponder the question, what is the point of regulation when there is no accountability on the fundamental ‘quis custodiet ipsos custodes’ of it all? This article answers it succinctly. It isn't to make markets better, it certainly isn't to protect investors, but it certainly does involve delivering a broadly risk-free sinecure with generous pension benefits to a certain element of the German bourgeoisie.

Dealbreaker run stunning headline this week: “Activist Investing Is Basically Insider Trading, Sayeth Gary Gensler”. They went on to note, as we've seen unspoken about at some length, Securities and Exchange Commission Chairman Gary Gensler has a long and growing to-do list.

Fascinating point - perhaps of course, Joe Brezhnev doesn't get trounced in the mid-term elections and then the Gensler agenda can press on regardless. More likely, despite the lack of apologia amongst the educated imbeciles who willfully elected an incompetent, they can safely call WOAT (Worst Of All Time) whenever he leaves office, the Democrats suffer an electoral backlash for defining “the grown-ups are back in charge” as management many kindergarten pupils could comfortably exceed and that means that Gary Gensler has, by the looks of it made or is in danger of making a dismal strategic error. His natural ambition to control everything is likely to end up in a heap akin to perhaps how Brooksley Born self-immolated in a rather bad-tempered CFTC term many years ago. That led to Chairman Bill Rainer, who was wholly efficient in office. Is Gary Gensler about to become a failure due to his over-ambition? It strikes me his agenda is in difficulty already, even before the midterm campaign properly gets underway.

But Gary Gensler is a highly intelligent man, he ought to be self-aware enough to appreciate all of the above even cocooned in the DC bubble, which means he will want to show he can achieve something which likely drives a faster push on regulation in an area he deems a low hanging fruit ripe for reform. Payment for order flow is an obvious target but crypto is the big kahuna that will get mainstream headlines.

Now factor the above into the Coinbase valuation which has been somewhat battered during the past week and perhaps it's still overvalued?

Career news this week: huge change at the London Metals Exchange Matthew Chamberlain (the CEO) is going to be stepping down and he's going to be joining of all things a cryptocurrency custodian Komainu. Good luck to Adrian Farnham, the LME Clear CEO who is going to become the Interim LME CEO and Group Head of Commodities from the 1st of May when Matt Chamberlain stands down.

As Charles Li's handpicked man to help integrate the London Metal Exchange into the Hong Kong Exchanges group. Matt has done a terrific job at the exchange, but he's not chosen pastures new, digital asset custodian, Komainu a joint venture between Nomura Securities, Ledger and CoinShares International. I wish Matt every success in his fascinating career move and applaud his being the first LME CEO for a while to leave at a time entirely of his own choosing.

Over in Athens, the Greece Stock Exchange they have picked a relative unknown in the parish Yiannos Kontopoulos, who will replace the outgoing CEO Socrates Lzaridis. Kontopoulos is currently a partner and chief macro strategist at London-based CQS Fund, who previously worked as Managing Director at UBS and Merrill Lynch and was formerly the CEO at Eurobank Asset Management. We look forward to hearing more from Mr. Kontopoulos in due course, as he takes over the fascinatingly positioned Greek Exchange, which has hydra-like tentacles in so many fascinating areas.

The Aquis Exchange CEO welcome news for Alasdair Haynes he's going to lead a new CityUK Business Council that's charged with improving listings and getting more business in the city of London. What an excellent choice! And another good move Andy Ross, the Chief Executive of Curve Global which has been closed down recently by the London Stock Exchange group its parent he's been given a new role Interim Digital Product Post-Trade Chief at the London Stock Exchange group.

And finally, this week, two fascinating appointments: former CFTC Chairman Christopher Giancarlo, who has been a serial performer on the IPO-Vid livestream was recently talking about his book “Crypto Dad” just a few months back, he's joining the eclectic board of directors of Digital Asset. And congratulations to a veteran of this parish Bill Brodsky, we actually had our money on his being His Excellency, but rather he's been nominated by his old college buddy Joe Biden as a member of the Securities Investor Protection Corporation.

And that brings us to the intersection of Main Street Wall Street, ‘Big World’ and bourse world if you will. Great article in Fortune this week: “The New York Stock Exchange's New Leader On The Core Three Beliefs That Are Guiding Her”:

1. Every Company is a Tech Company

2. ESG will only grow in importance

3. Our capital markets are without equal

On behalf of the team at Exchange Invest, we would humbly append a 4th: Lynn Martin is an awesome powerhouse at the epicentre of the powerhouse of capital the New York Stock Exchange. She knows that, we know that and parishioners, you need to know that too.

And on that mysterious and magnificent note, my name is Patrick L. Young, Executive Director of Valereum PLC and also the publisher of the Exchange Invest daily newsletter.

I wish you all a great week in blockchain, life and markets.

LINKS:

Global Futures And Options Trading Hits Another Record In 2021F
IA

NSE's Largest Derivatives Bourse In The World In 2021T
he Economic Times

Schwab CEO Sees Brokerage Of The Future Looking More Like Uber
Bloomberg

Nasdaq Pipeline Is 'Incredibly Strong': CEO Friedman
Bloomberg

Valererum PLC Name Change
Valereum PLC

SEC, CSE Start Project To Establish Central Counter Party System
Daily FT

Aver, The World’s First Fully Decentralized Web3 Betting Platform, Closes $7.5M Seed Funding Round
Yahoo Finance

KRX Chief Highlights Need For Full Resumption Of Short-Selling
The Korea Times

IHS Markit Reports Fourth Quarter 2021 Results
IHS Markit

IHS Markit Posts Higher Q4 Profit, Revenue
MarketWatch