This week in the parish of bourses and market structure:
ECB reckons it is the BTC Alamo
As both ASX and SBF struggle with sorry
Bybit hacks its workforce
and the AFR calls checkmate on the ASX board
My name is Patrick L. Young.
Welcome to the bourse business weekly digest.
It’s the Exchange Invest Weekly Podcast Episode 173.
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 and happenings 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. $299 until the end of the year, $349 it’s an inflation world out there coming soon. Subscribe now, drop us a DM and we’ll get you signed up.
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Of course where else to start but the SBF FTX fiasco. SBF himself spoke at a conference we rechristened NYT Dealcrook last week, and indeed many other places besides including the Financial Times. SBF didn’t actually say anything you saw as it remains a cocoon of coquettish Britney Spears style “Oops, I did it again” and otter nonpology. Obfuscation plays a key role in the middle of the whole fiasco.
The fiscal pornography of FTX stories continues to roll out, including that $100,000 a week of catering bills in the Nassau HQ.
Matt Levine noted there were $55,319 owed to the Margaritaville resort in Nassau which my back-of-the-napkin calculation reckons amounts to somewhere around 4000 signature drinks plus tips at 13 bucks a pop…that suggests the resort had risk management and accounting controls which were every bit as lousy as SBF’s FTX.
Of all the recent revelations, a bit I’m still struggling with is, not merely that $100k a week was catering 24/7 at the Nassau HQ, twice weekly massages for all staff, etc., etc., vast expenses plus generous per diems for trips overseas and of course that crazy $55k bar tab. What really bothers me is that there was a regular pop up barber in the offices in Nassau and yet SBF still had a dollar store Afro-mullet which made him look like a badly coiffed refugee from the supporting cast of Sesame Street. Clearly, this expense didn’t stretch to a laundry either given the oft-stained look of SBF in his world, what we might tenuously call corporate prime (sic).
Matt Levine indeed hit the nail on the head with a mot juste “FTX spent like the company had thought it was but it didn’t bother to find out what kind of company it actually was.”
As a footnote to this: how did so many people seem to struggle, the corporate largesse as being normal and not smell a rat, even in the US division with $200 per diem DoorDash grocery vouchers, etc, etc, etc, and yet and yet, the compliance team seemed to think they were at a normal functioning company right until the very last moment?
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The Australian Financial Review (AFR) has been trenchant in its criticism of the ASX. ASX Needs Management And Board Cleanout went the tart headline of chanticleer just during the course of this week.
As they noted:
ASX Chairman Damian Roche ought to be replaced, and CEO Helen Lofthouse needs to clean out the ASX management ranks.
The failure was especially egregious because the ASX is supposed to be the gold standard of disclosure, governance, and transparency.
Instead, it led the market on a merry dance over the past three years with repeated assurances its CHESS replacement was 95% complete and on track.
This farcical understanding (and I continue from the AFR) of the project (that’s the CHESS project) status was abandoned in November after Accenture did a 12-week review that found that the new CHESS system was only 63% Complete.
ASX’s delusion about the project was so great it foolishly convinced the Australian Securities and Investment Commission Chairman Joe Longo, who told the parliamentary joint committee this year that the CHESS project software was “built”.
Surely, ladies and gentlemen, it must indeed be a checkmate for the people who failed on CHESS. That’s the argument of the AFR as the mood is the darkest towards ASX I can ever recall in Australia. The ASX board has zero credibility being the inheritors of a mantle, which came from a flawed monopoly milking strategy and his broad embarrassment to Australian markets. ASX needs a total revision from the top down – I’m not even convinced that CEO Lofthouse is viable long-term in her position but as a caretaker, she ought to stay in the hope of a credible Chairman being found to make the hard steps towards regaining the confidence of markets the world over in the wake of the Digital Asset (sic) disaster, which was the non-replacement of CHESS.
Meanwhile, ASX will be cutting up to 200 jobs from their failed blockchain project.
calls for an ex-ante assessment of the security of supply and financial stability risks went from an incredibly tedious headline to a letter from Europex. Actually, this was a joint letter that came from EACH, from Europex, and a series of other organisations in the energy marketplace. What they’re trying to do and it was very good work by EACH et al, to elegantly defenestrate some of the more stupid European Union/European Commission policies of recent times (where they’re effectively going to take the energy market turned upside down, rip it asunder, rip out trust and end up with nominally a price which just happens to suit the politicos, but actually doesn’t work with the tide of financial markets).
Frankly, I think this letter should have included the sentence “are you really so dumb that you are going to risk a $33 billion contagion effect, which freezes your citizens to death and hastens the demise of your guild or failed technocrats?” purely the industry associations took the more diplomatic approach.
Exciting news from Macau, they’ve been looking to build an asset stock exchange for a while and they have won. They’ve approved an application which is backed by the former Hong Kong Exchanges boss Charles Li that helps diversify the Macau economy away from of course being hugely popular for casinos and tourism related to casinos. A very, very interesting move for Charles Li as he extends his overall move towards offering greater SME funding in “equity-like products”.
No results this week, just one new market, TP ICAP has got a crypto exchange licence in the UK. I don’t know whether that means they’re right in time for the upwave or it’s as good a sign as they come that indicates that it is all over for crypto as the perma-laggard TP ICAP has now got a licence?
Deals news this week, it was a busy week for deals in the parish, all the deals 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 some edited highlights:
Binance has acquired JFSA Registered Sakura Exchange BitCoin. That means that Binance are now committed to enter the Japanese market from which they had previously been banned under regulatory compliance.
Gosh, you know what, only a few months ago the world was under siege in crypto terms from some guy called SBF with a firm called FTX who were just buying all the licences they needed. Phew! Thank goodness, that’s all over!
Finally, after months of denials, Huobi and Poloniex crypto exchanges are set to merge.
SIX, Ripple, and Middlegame Ventures have pumped $72 million into key rock.
Galaxy Digital won the bid for the insolvent crypto lenders Celsius’ self-custody platform. Gosh, there’s quite a tongue twister. Of course, that was one of many things that at one point in time SBF FTX was trying to hold together in order to manage to hold together his own crumbling empire.
If you’re looking for some reading to try and understand over the festive period, just what this whole world of blockchain, cryptocurrency, and the FinTech world is, then you need my most recent book “Victory or Death?” published by DV Books. Available via Amazon and distributed by Ingram worldwide.
While you’re waiting for your copy of “Victory or Death?” to arrive, check out our live stream. It’s on Tuesday at 6pm London, 1300 New York time – the IPO video live show. You can catch the back episodes on LinkedIn, and YouTube via IPO-Vid.
Go search IPO-Vid and you’ll find last week’s epic show, our part one of a Review of 2022, where we took some excerpts from 20 of our leading guests out of the 40 odd that we had during the course of the last year.
Coming on Tuesday, it’s going to be a review of the year part II complete with viewer questions and much, much more. I’m really excited about the show. These two are must-watch episodes of the IPO-Vid canon. Find it whether you’re on Facebook, LinkedIn, or YouTube by searching IPO-Vid.
Crypto land this week, the crypto exchange Kraken has now laying off a third of their workforce, that’s 1100 people adding to the misery of the crypto winter in terms of huge job losses across the board.
Crypto exchange Bybit is cutting 30% of their workforce in what they called a ‘deepening bear market’. And what’s more? They’re right – it is a deepening bear market.
Product news this week, the Saudi Exchange Tadawul has announced the market-making framework for equity and derivatives markets, which is very exciting.
ICE benchmark administration has launched the ICE Carbon Reference Entity Data Service (ICE CRED).
CME Group and CF benchmark are going to be launching three new DeFi reference rates and real-time indices on December 19th.
Osaka Exchange is introducing ESG Index Futures.
Over in Ghana, the IFC backed Ghana WRS (Warehouse Receipt System), in collaboration with the Ghana Commodities Exchange (GCX) has been launched in partnership with four savings and loan companies.
Technology news this week, NASDAQ have completed a migration of their first US options market to go into the cloud with AWS. MRX has already reported a 10% performance improvement. Thanks to being in the Amazon cloud.
Euronext have completed the acquisition of the technology business from Nexi’s capital markets activities. That is of course the engine which is powering their bond business MTS.
Fullscale operation of the National Stock Exchange (NSE) of India IFSC-SGX Connect is now targeted for Q2 of 2023.
Xpansiv (who’s Henrik Hasselknippe we have some edited highlights during the course of this week’s first part IPO-Vid review of the season 2022) is launching CBL carbon auctions to provide a transparent, efficient, fair platform for scaling carbon credit transactions.
The Bank of England have selected BMLL’s granular order book data for research and analysis, while FactSet and BMLL Technologies are collaborating to provide cloud-based granular historical tick data and analytics. Fascinating news from our former IPO-Vid guests and friends of Exchange Invest Paul Humphrey and Elliot Banks of BMLL.
Regulation news this week, one fascinating story the CFTC have granted TeraExchange a reinstatement of their licence.
TeraExchange was the first to be regulated for crypto derivatives back in 2016 and lost its licence in 2021 on a kind of a failure to prohibit pre-arranged and wash trading. Given that SEFs were intended to be used by former swaps participants moved into the light of multilateral markets post Dodd Frank some anyway viewed the ‘pre-arranged’ accusation against terror exchange as somewhat remarkable given the ‘outside-in’ approach seemingly prevalent in some other venues for more ‘conventional’ interest rate derivatives trades.
SEBI have set up a panel to review corporate takeover rules.
Italy rather optimistically is going to be imposing a 26% capital gains tax on crypto profits. Remind me what is a crypto profit again?
Career news this week, a couple of snippets OCCs Vishal Thakkar has been named Chief Risk Officer of OCC, and Rodrigo Buenaventura of Spain has been appointed chair of the IOSCO Sustainable Finance Task Force.
And that only leaves us to ponder, the wonders of European energy. UK energy drillers are already fleeing the trendy leftie conspiracy of scrapping fossil fuels at the expense of winter heating and energy security. Somewhat amusing to note that, therefore the major oil companies have been driven into the hands of the crazy gang of Caracas in Venezuela Chevron formally signed oil contracts in Caracas this week.
And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, founder of Exchange Invest, builder of markets and exchanges the world over.
I wish you a great week in blockchain, life, and markets.
Macau Approves Asset Exchange Backed By Former HKEX Boss Charles Li As It Diversifies Economy
South China Morning Post
Bybit CEO Ben Zhou On Planned Downsizing
Ben Zhou Twitter
Full Scale Operation Of NSE IFSC-SGX Connect Targeted For Q2 2023
OCC’s Vishal Thakkar Named Chief Risk Officer