Feb 11, 2023 7 min read Exchange Invest Weekly Podcast

180 Exchange Invest Weekly Podcast February 11th, 2023

Hong Kong Exchange (HKEX) made hay in KSA, that was a good start to the Hong Kong Middle Eastern trip for Hong Kong’s CEO John Lee.

Transcript:

This week in the parish of bourses and market structure:

Ion Hacked

CFTC Delays COT

Ion Ransom Paid

Hong Kong Exchanges Make Hay In KSA

My name is Patrick L. Young

Welcome to the bourse business weekly digest

It’s the Exchange Invest Weekly Podcast Episode 180

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 from the past 7 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.

Ion was hacked, and there were massive headaches in the derivatives processing business as a hack on the hypersecretive Ion Group’s networks resulted in all manner of processing problems, turning the exchange industry effectively back to the early 1980s if you were one of the counterparties interacting via Rolfe & Nolan terminals. It was a dreadful day and a dreadful week for ion where their notoriously ‘shy’ demeanor for PR was eating their reputation while multiple counterparties struggled to keep up with trade processing.

The CFTC was placed in what I do believe was an unprecedented situation – delaying the Commitment of Traders (COT) reports because Ion Group (through what used to be called Rolfe & Nolan) had such a cluster mess after being hacked that counterparties simply could not process their trading data.

Huge ramifications will emerge from that, of course, and it will likely materially affect Ion. Expect questions on the Ag Committee and of course, Ion being a non-US entity, swingeing approbation is even more likely I suspect… Suddenly the privacy of Ion and its funder looks like a horrible liability.

A quick glimpse demonstrates some $450 million of outstanding 5.75% bonds due 2028 from the company controlled by, of course, former bond trader Andrea Pignataro.

A ransom was ultimately paid. A ransom paid though is probably not a burden shared as apart I suppose from the counterparties currently enjoying the futures trading 1983 mode, after the Ion hack. #CoyoteUgly was the way we put it in Exchange Invest with the aftermath which is already shaping up to be part Stephen King, part Roald Dahl on the horror story-meter. The regulators are vexed to prepare for what may be overzealous prognostications and prescriptions.

And ultimately this week, Hong Kong Exchange (HKEX) made hay in KSA, that was a good start to the Hong Kong Middle Eastern trip for Hong Kong’s CEO John Lee. He went overseas to the Middle East started in Riyadh and was accompanied by many movers and shakers from Hong Kong, most notably for the exchange Parrish, the Hong Kong Exchanges CEO Nicolas Aguzin, who immediately signed an MOU with Saudi Tadawul within a day of touching down in the Middle East.

‘No Bids, No Chat’ went one of the headlines during the course of the week as our bitcarnage coverage continued as we’re looking at the crypto winter and how it’s managing to further aggravate and agitate the whole world of the crypto world.

“Some of the FTX businesses have in aggregate attracted interest from more than 100 parties” according to earlier filings. However, ultimately, the liquidators were forced to extend bid deadlines for FTX, Japan, and FTX Europe’s units. The preliminary bid deadline has now moved back to March 8 with the auction date of April 26. That suggests that there’s been a broad global meeting formally or informally of “Tyre Kickers Anonymous”, but not actually too many people who really seem eager to buy the European and Japanese businesses that have further ramifications because the odds then on FTX International re-emerging from Antigua-Bahamas to the world, are arguably even lower than the big fat zeroburger rating that I gave that idea in Exchange Invest last week.

More on bitcarnage, the crypto crisis, and crypto winter can be seen every day. You can read it in Exchange Invest daily, the bourse business newsletter.

Interesting story, asset managers and banks have called on the European Union to cost the plans that the European Commission has to grab Euro clearing from London.

The cross-industry call in a joint statement said the proposals to bolster Euro-denominated derivatives clearing in the EU would damage the bloc’s capital market.

The four industry bodies: AIMA, EFAMA, FIA, and ISDA

“They would make EU firms less competitive and would have a negative impact on the derivatives market, EU clearing members, and their clients, EU investors and savers, and the Capital Markets Union. Damning stuff altogether.

A bit of a shame, Swaziland’s dematerialization of securities is not yet complete, we heard this week.

In results, a huge number of results this week, ICE managed to increase their dividend by 11% and announced another set of strong full-year numbers. Perhaps the star of the week could have been CBOE with their Q4 numbers or possibly MCX, India, where they saw a 12.5% year-on-year rise in their Q3 numbers.

All of those results were in Exchange Invest along with many others besides. If you want to keep up with the bourse business every day, then send us a DM on whatever social media that you wish to use and find Exchange Invest where we will be happy to respond, $349 per user per year that is the current subscriber rate.

It was a busy week for new markets in the parish as well. Indonesia is targeting the launch of its national crypto exchange by June. That’s somewhat of a delay to what they’d hoped to originally roll out by the end of 2021. But then again #It’sComplicated these days building new crypto exchanges, particularly ones where you want to line up with the overall fit framework.

If you want to try and understand better the whole world of blockchain, cryptocurrency, and the FinTech world then why don’t you catch my latest book “Victory or Death?” published by DV Books and is available, and distributed by Ingram worldwide you can buy it at Amazon et al.

Don’t forget while you’re waiting for a copy of “Victory or Death?” to arrive, you can check out our livestream Tuesday 6pm London, 1300 hours New York time – the IPO video live show.

IPO-Vid 093 was epic this week, we had Craig Pirrong: The Streetwise Professor Speaks. Coming up next week IPO-Vid 094 with Monica Singer, South Africa’s most knowledgeable figure in the clearing and settlement of securities is going to be discussing STRATE to the Blockchain.

Coinbase had an epic week in crypto land, they won a dismissal of a lawsuit claiming that they had sold tokens illegally. Their stock jumped instantaneously some 24% and has been on a bit of a surge ever since. Admittedly, it’s still down 60-70 % from all-time highs.

Product news this week, India’s MCX is going to relaunch cotton futures contracts on February 13th, and SGX is going to launch container FFAs.

Technology news was dominated by the Ion cyber attack during the course of the past week.

In regulation, the Bank of England has said that they’re going to be toughening up rules for liability-driven funds.

Liability-driven funds being of course the LDI instrument that essentially paid to the Liz Truss Prime Ministership during the course of the year, some might say due to the feelings of the Bank of England.

At the same time, Britain’s finance ministry has set up draft rules to regulate crypto assets, although there’s also a crackdown in the air against those who are advertising crypto in a fraudulent manner, that’s coming from the FCA too.

Over at the SEC, Gary Gensler is weighing scaling back his climate rules as lawsuits loom. The question is, of course, can litigation kill the SEC’s overreach? Or will they manage to hold some ground?

Career path this week, ASX has continued its board renewal. Vicki Carter and Luke Randell will join as non-executive directors. Ms. Carter’s appointment was effective from 2nd February. Mr. Randell is coming up on the 3rd of April.

A little bit of good news from the FIA (Futures Industry Association) they’ve announced their 2023 Hall of Fame Honorees and it’s a fabulous slate of people including the likes of Gedon Hertshten, Elizabeth Sam, and many many others. Most notably, I think is the late lamented Nick Carew Hunt, what a tragedy that he won’t be able to actually come along and celebrate his victory in person because it would have been a joy to do so at the Boca resort for the FIA.

However, one person who will be there is the former Vice Chairman of CME, a board member of CME Group from 1984 to 2017, and a leader and driving CME electronics James Oliff. I salute you, James, and I’m really looking forward to toasting your excellent achievement at the Boca Conference.

Meanwhile, the wait is such nowadays that if you want a new British passport for your summer holidays, it may be best to apply for it now and hope it arrives, probably before summer 2024! Such as the dysfunction of working from home. Dysfunctional brigades of civil servants masquerading as employees that their recent threat to go on strike signs like a boon. How could service actually be any worse?

Short of the infamous threats of a philosophers’ strike in the Hitchhiker’s Guide to the Galaxy. I cannot conceive of a more hollow trade union action.

And on that mysterious and magnificent note from the parish of exchanges all the way through the ‘big world’. My name is Patrick L. Young.

Thank you very much for listening. I wish you all a great week in blockchain, life, and markets.

LINKS:

Asset Managers, Banks Call On EU To Cost Plans To Grab Euro Clearing From London
Reuters

Dematerialisation Of Securities Not Complete
Times Of Swaziland

ICE Reports Strong Full Year 2022 Results

ICE Announces 11% Increase To Its Quarterly Dividend Of $0.42 Per Share
ICE

Cboe Global Markets Reports Results For Q4 2022 And Full Year
Cboe

MCX Reports Net Profit Of Rs. 38.79 Crore In Q3 FY 2023
MCX

TMX Group Limited Reports Results For Q4 Of 2022

TMX Group Limited Increases Dividend By 5% To $0.87 Per Common Share
TMX

Indonesia Targets Launch Of Its National Crypto Exchange By June
Investing