11 min read

144 Exchange Invest Weekly Podcast May 21st, 2022

National Stock Exchange of India’s co-location scam, the holy hoax fiasco, CBI are ‘still probing’ the larger plot (that’s the Indian fraud agency)


This week in the parish of bourses and market structure:

ASX declares CHESS dates are “No Longer Viable”

LME pushes for a better metals market with less OTC opacity and ICE has new buyers for its Euroclear stake while UK antitrust investigates the LSE’s acquisition of Quantile.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 144.

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.

And indeed this week marks a milestone the 9th Anniversary edition of Exchange Invest was published, with an opportunity to reflect on what’s been going on over the course of the last 9 years we looked through the lens of “Young’s Pyramid” of exchanges amongst other things and noted how CME has broadly remained in the lead at the pyramid of exchanges top throughout that period of time while the relative largest loser in rank terms was  B3 which dropped from Tier 1 to the middle of Tier 2.

London Stock Exchange Group was a dramatic gainer of market capitalization throughout particularly due to not only its share price acceleration, which was a minor factor, but also various elements of frenetic acquisition from the Xavier Rolet era, and more recently, the “bulking up” effect through acquiring Refinitiv.

All that story and more can be found on our medium page. and you can reflect on how the exchange parish has been growing through the course of the last 9 years as viewed through the lens of Exchange Invest.

The CME Group’s chairman was perhaps the most high profile person that’s chairman and CEO Terry Duffy to appear before the US House of Representatives Agricultural Committee this week. To quote a rather lengthy statement, but it is nonetheless rather on the button.

“FTX proposes to implement a ‘risk management light’ clearing regime that would significantly increase market risks by potentially removing up to $170 billion of loss-absorbing capital from the clear derivatives market, eliminating standard credit checks, destroying risk management incentives by limiting capital requirements and mutualized risk. Under false claims of ‘innovation’, FTX this proposal is nothing more than cost-cutting measures that would come at the expense of risk management, best practices, market integrity, customer safety and ultimately, financial stability.”

As Terry Duffy tore apart excoriating the what may be a‘may work for retail’ proposal to create the unsinkable auto closure versus classically margined CCP approach which looks, in my humble opinion, a lot like the blueprints of the Titanic for clearinghouses. Well, you know what it’s like when you hit the iceberg at the wrong angle, or as Terry Duffy described it perfectly, glaringly deficient.

Unfortunately for what could have been a golden week for CME, they were seen to be rather glaringly deficient by their own shareholders. CME Needs To Start Acting Like A Public Company went the banner headline in Crain’s Chicago Business, as the exchange came under fire when Terry Duffy’s vast executive remuneration for the course of the last year well in excess of $20 million was voted down by the shareholders.

Speaking of larger-than-life issues, the National Stock Exchange of India’s co-location scam, the holy hoax fiasco, CBI are ‘still probing’ the larger plot (that’s the Indian fraud agency). Well, of course, they’re still trying to find out what they can possibly do in terms of knocking down the walls to discern just what’s been going on.

Meanwhile, in court, things are edging closer to a taste of Lily, Rosemary and the Jack of Hearts with the judge offering a colorful surmise, quoting no less than Bob Dylan.

Special judge Sanjeev Aggarwal noted:

“It appeared that the accused A-1 (Ramkrishna) prima facie seems to have been running the affairs of NSE akin to that of a private club; singer-songwriter, Nobel Laureate Bob Dylan once said, ‘money doesn’t talk, it swear’,  which is a song from the 1964 song album ‘It’s all right Ma I’m Only Bleeding’, as the judge went on to note, this means that money not only has influence but it has great influence, even a perverse influence on people”.

The LME, their striking back after the nickel nightmare, they’ve launched a consultation on OTC position reporting for all physically deliverable metals and accountability levels for reportable OTC positions. What that means, in essence, is it’s the first move to try to get through a plan for more regular reporting of OTC positions in all physically delivered metals like Aluminium, Cobalt, Copper, Lead, and of course, Nickel or Phil Stafford as the Financial Times, pithily put it: “Reform of the OTC commodities market may be a hard challenge but the LME isn’t letting a good crisis go to waste.”

It was a very very busy week for results in the parish. All the deals and information were in Exchange Invest daily – the newsletter no person can afford to be without in capital markets and market structure. As we celebrated our 9th Anniversary some of the highlights were, well, TP ICAP revenue static pretty much as usual. If it hadn’t been for Liquidnet the company would be entirely static.

OTC Markets Group, they saw their operating income increase slightly. Net income though looking good + 11%. Luxembourg Stock Exchange posted its 2021 financials which showed a net profit up 20.5% equally encouraging numbers from the National Stock Exchange of India, their quarterly profits have been jumping around in the course of recent times, net profit for the March 2022 quarter rose no less than 342%.

In new markets this week – Japan is going to launch their first exchange for carbon emissions trading, while the new electricity operating platform is going to go live by Q4 in Cyprus. Operations are underway for the massive bridging link of the NSE IFSC with the Singapore Exchange in Singapore all the way to the Gujarat International Financial Centre. The first product up there they’ve introduced negotiable large treads from the STX group all the way to India.

The Bangladesh e-commerce minister he’s urging a rapid commodity exchange implementation. While lots of eyes have been on Coinbase this week, one of their better pieces of news is that they have backed the African exchange MARA, which is looking to spread cryptocurrency adoption across Africa.

Deals, well pretty frenetic as well there once again. All of the information aware in Exchange Invest daily every single day of the week plus the free Saturday edition.

Intercontinental Exchange (ICE) – they’re busy paying for the recent acquisitions, they priced it billion dollars and senior notes interesting there to compare and contrast as we were doing on social media and in the newsletter this week, with the rates being paid three-year money now 3.65% compared to 0.7% that ICE was able to borrow less than two years ago.

Meanwhile, ICE made an announcement on their divestment of the 9.85% Euroclear stake, they’ve got different buyers to those who were originally slated. They’re now selling 5.42% to Caisse des Dépôts et Consignations (CDC of Paris) and 4.43% to what amounts to essentially a sovereign wealth fund of Belgium, the Société Fédérale de Participations et d’Investissement SA (SFPI-FPIM)

Very interesting to see that we’re getting a quasi Franco Belgian carve up of that stick that certainly means that the Great Game is going to be a lot more interesting and suggests that your next have got pulled position when the Euroclear banks finally sell out.

Meanwhile, back to the ICE, Wall Street had a few jitters this week over concerns that ICE and Black Knight might hit antitrust and indeed antitrust was a big issue as we were heading into the recording studio. As the UK antitrust authorities the Competition and Markets Authority (CMA) announced as had been thought what was going to happen earlier in the week, they are investigating the London Stock Exchange group’s acquisition of Quantile. Concerns there about the concentration of technology in the market for CCP clearing. Of course, CCP clearing is just one of the many newfangled wonder things that have been enhanced by technology even though it’s been around for a century or more. if you want to understand where technology is going then “Victory or Death?” – Blockchain, Cryptocurrency and the FinTech world, my latest book may be for you. “Victory or Death?” is published by DV Books and is distributed by Ingram worldwide. While you’re waiting for your copy of “Victory or Death?” to arrive, check out our Livestream Tuesday at 6pm London time, 1pm New York time – it’s the IPO-video live show. Catch the back episodes on LinkedIn and YouTube via IPO-Vid.

Most recently, we had a fantastic discussion Disrupting Exchange Data Internationally with our guest Jonathan Bloch the CEO of EDI Limited and coming up on Tuesday, again at 6pm London time, we’re looking at Delivering SaaS Through TT our guest there is going to be the Chief Executive of Trading Technologies Keith Todd.

In crypto land, well, Coinbase came slightly unstuck this week with a bit of poor messaging. Ultimately, they were finding 10k things that usually tend to be a humdrum little SEC EDGAR affair, but when you’ve got the world of crypto suddenly reading everything. Well, one of the headlines was the Wall Street Journal Coinbase Says Users’ Crypto Assets Lack Bankruptcy Protections. That needless to say sent a lot of people scurrying for their crypto and trying to move it into a cold wallet somewhere and ultimately causing a huge amount of kerfuffle most notably for the Coinbase shares.

The stock there was collapsing still Cathie Wood, one person who seems determined to catch that falling knife no matter how low it goes, given she was bullish at $380 plus. How low can she go with the share now at or around $100 even after bouncing quite considerably this week?

In product news, NCDEX (National Commodity Derivatives Exchange) of India – they’re going to be launching futures trading in coffee by the end of June. While the Korean Exchange in Seoul and Busan they’re preparing to launch carbon credit futures.

The United Arab Emirates in the week when their esteemed great leader passed away (our condolences on that) the UAE have listed their first Dirham-denominated treasury bond on NASDAQ Dubai while China’s newest commodity exchange the Guangzhou Futures Exchange announced they’re planning to offer silicon contracts in the second half of the year.

Technology news this week was dominated by events down under once again it’s a delay. The issue was CHESS which continues to delay semi-permanently. It’s now at the point where the key technology has been rolled out to such a degree that the ASX won’t even give a guidance as to when it’s going to happen. Leading a lot of people such as myself to say that perhaps that’s proof that it’s not going to happen. ASX’s group executive for technology Tim Hogben had said last year that only a US-China war could delay the CHESS roll-out.

With this degree of prescience, it’s frankly worrying the ASX COO has a vote in the upcoming general election, methinks. At the same time, we saw our first total competitor coming out Proximity that’s offering a proxy voting alternative for the ASX users and thus squeezing out some of what was going to be the functionality of the CHESS replacement via digital asset technologies, if that actually ever gets implemented.

Meanwhile, the ASX was in the crosshairs of the Chanticleer column of the AFR, where they were recommending the ideal candidate for the ASX Chief Executive role is someone with experience running an exchange and adept at turning around wayward IT projects. The article went on to say the obvious person who fits this bill is Stacey Cunningham, former president of the New York Stock Exchange, she stepped down as chief executive in December after 3 years in the job, she oversaw a core tech upgrade at NYSE.

Personally, I doubt that position will be advertised as poison chalice available to a suitably qualified individual. But clearly, after the mess made by all those blokes, it would be only entirely fair or would it be all too predictable to leave the clear up to a competent lady.

Regulation news this week, despite the crypto crash the BIS (Bank for International Settlements) that’s the banker’s bank, their data shows there’s unstoppable momentum for Central Bank Digital Currency.

Meanwhile, in career paths, the current Chief Executive Officer Vikram Limaye, is not part of the selection process for the new National Stock Exchange of India CEO. Where once nepotism was seen as a benign positive for NSE, the smooth internal transitions to Ravi Narain and Chitra Ramkrishna are now seen as anathema by an exchange eager for transparency in the post -Holy Hoaks era.

To that end, SEBI has received 2 names for the NSE top job and it may come back and ask the exchange for more because this is India and of course, SEBI has the right to at all points in time veto except or generally dabble in the politics of the exchanges. Anyway, SEBI has received the names of a Yatrik Vin and the current Bombay Stock Exchange (BSE) CEO Ashish Kumar Chauhan as potential candidates for the top job at the National Stock Exchange.

In ‘Big World’ this week, shocking news well, shocking, but not shocking if you’re actually economically rational, was the announcement that Venezuela is going to do the old François Mitterrand shuffle. It’s taken them a bit longer than the French president who famously nationalized lots of stuff in his first term and then privatized it all in their second term. But now, Nicolás Maduro, the socialist-communist President of Venezuela, who took over from Hugo Chavez, he has decided to start selling stakes via the stock market in a huge series of the different companies that were nationalized under his predecessor.

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, publisher of Exchange Invest, builder of exchanges.

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


CME Group Chairman And Chief Executive Officer Terry Duffy To Appear Before U.S. House Of Representatives Agriculture Committee
PR Newswire

CME Needs To Start Acting Like A Public Company
Crain’s Chicago Business

NSE Co-Location Scam: CBI ‘Still Probing’ The Larger Plot
The Hindu Business Line

NSE Co-Location Case: Court Cites Bob Dylan While Denying Bail To Accused
Business Standard

NSE Case: Court Cites Bob Dylan, Frankenstein, While Denying Bail To Chitra Ramkrishna
Outlook India

Consultation On OTC Position Reporting For All Physically Deliverable Metals & Accountability Levels For Reportable OTC Positions

LME Seeks To Require OTC Position Reporting As It Rebuilds Its Reputation After Nickel Chaos
South China Morning Post

LME Starts Consultation To Make OTC Metals Market More Transparent
Financial Post

The LME’s Operation Fightback
Financial Times

LME Boss Wants To Crack Open A Black Box Of Commodity Trading

TP ICAP Q1 Trading Update

TP ICAP Q1 Revenue Rose, Market Share Grew

OTC Markets Group Reports 1Q 2022 Results

Luxembourg Stock Exchange Posts 2021 Financials
CrowdFund Insider

National Stock Exchange Of India Standalone Net Profit Rises 342.14%  To Rs 1517.61 Crore In The March 2022 Quarter
Business Standard

Japan To Launch First Exchange For Carbon Emissions Trading
Nikkei Asia

New Electricity Operating Platform To Go Live By Q4
Cyprus Mail

NSE IFSC-SGX Connect Commences Operations At GIFT City; Know About This Facility

NSE IFSC-SGX Connect Commences Operations At GIFT City; Know About This Facility

NSE IFSC-SGX Connect Commences Operations

Fast-Track Commodity Exchange
The Daily Star

Backed By Coinbase And Alameda, African Exchange MARA Eyes Continental Prospects

MARA Raises $23m From Coinbase, Alameda To Spread Crypto Adoption Across Africa

Intercontinental Exchange Prices $8 Billion In Senior Notes And Issues Notices Of Redemption For Four Series Of Senior Notes Due 2022 And 2023

Intercontinental Exchange Kicks Off Six-Part Bond Sale For M&A

ICE Announces Update On Divestment Of 9.85% Euroclear Stake

Wall Street Has Jitters Over ICE-Black Knight Antitrust Concerns
BNN Bloomberg

Coinbase Says Users’ Crypto Assets Lack Bankruptcy Protections
Wall Street Journal

Move Along, Says Coinbase’s Armstrong
Financial Times

Coinbase New Disclosure Does Not Mean Firm Faces Bankruptcy Risk, Says CEO

Coinbase CFO Says “Bankruptcy” Note Was About Regulation, Not Solvency

NCDEX To Launch Futures Trading In Coffee By June-End
The Hindu Business Line

KRX Prepares To Launch Carbon Credit Futures
The Korea Herald

UAE Lists First Dirham-Denominated Treasury Bond On Nasdaq Dubai
The National

China’s Newest Commodity Exchange Eyes Silicon As First Contract
BNN Bloomberg

ASX: CHESS Is Not The Australian Stock Exchange’s Only Technology Delay

BIS Data Shows Unstoppable CBDC Momentum

Current CEO Vikram Limaye Not Part Of New CEO Selection Process: NSE

SEBI Receives Two Names For NSE Top Job, May Ask Exchange For More
Business Standard

Maduro Puts Up For Sale The Companies That Chávez Had Nationalized