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187 Exchange Invest Weekly Podcast April 1st, 2023

MEMX have an Options raising round, as the SEC reduced their paperwork burden; The ASX is under duress as its monopoly is challenged ...


This week in the parish of bourses and market structure:

MEMX have an Options raising round, as the SEC reduced their paperwork burden

The ASX is under duress as its monopoly is challenged

Mark Makepeace reforms the FTSE Band

While Binance and Coinbase are in the eyes of separate but related storms

…And SBF is accused of bribing Chinese officials

My name is Patrick L. Young

Welcome to the bourse business weekly digest

It’s the Exchange Invest Weekly Podcast Episode 187

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.

Welcome to a puppy-centric edition this week. Apologies got a little bit of background noise. It’s rather tricky keeping SiX exciting and a very very, very active puppy silent, I’m afraid.

Anyway, the ASX monopoly beast may yet be challenged – the Australian Labour government has made its boldest steps yet to open Australian equity markets to competition particularly in clearing and settlement.

Optiver is leading the MEMX options round while FTX/US LedgerX has interest from MIAX and Kalshi apparently, in the bidding war.

The SEC is seeking to reduce its preponderance of paper as it crawls a little closer to the digital age while LME Nickel contracts are in dire need of modernization according to a broad range of commodity companies as battery demand reshapes the market.

It’s an FTSE deja vu from Mark Makepeace, albeit in a format better suited to the digital age than the stodgy LSEG. FT and SGX are partnering with a new Wilshire Index business under the direction of “Mr. FTSE” himself – a fantastic fruition to Mark’s first year with Wilshire.

Elsewhere, the CFTC begins to bear its fangs against Binance and CZ  as the SEC prepares for action against Coinbase.

SBF gets new bail terms but as indicted for a $14 million backhander to China.

ASIC is investigating ASX over the CHESS replacement debacle while TASE reports sound numbers.

In parish notes this week, we reported something that is undoubtedly going to become an epic benchmark and derivatives history for diversity.

A year ago, on March the 29th 2022, the United States Senate voted unanimously to confirm no fewer than 4 women: Kristin Johnson, Christy Goldsmith Romero, Caroline Pham, and Summer K. Mersinger, to serve as CFTC Commissioners, creating the first-ever, woman-majority commission overseeing derivatives in the USA. It was quite a remarkable event and one to undoubtedly celebrate. Presumably one of these 4 will be replacing Chairman Rostin Behnam in the near future.

In Bitcarnage: It was a week for the big J’Accuse!

The SEC swept into action charging Justin Sun of Tron fame with fraud and extracting fines from a series of his influencers. Meanwhile, in the same week as Dirty Bubble Media noted about Coinbase “We believe Coinbase is a cash-burning regulatory nightmare with limited upside” in their (Brother, Can You Spare A Coin) newsletter edition. Coinbase was also subject to an SEC Wells notice…watch this space, it’s gonna get uglier.

Meanwhile, SBF got bail terms with a phone so basic, it might struggle to run Snake and a laptop slowed by an interminable number of monitoring tools. That was the good news, he was also indicted for a $40 million bribe of Chinese officials.

It doesn’t get more guilt-free than that, I suppose.

Meanwhile, nobody has mentioned the thaw in crypto winter for weeks, I wonder why?

James Block of Dirty Bubble Media was an epic guest on this week’s IPO-Vid livestream and that was perfectly timed to also discuss not only COIN but the CFTC charges laid against Binance and its eponymous CEO CZ.

All that analysis comes daily in the ‘Bitcarnage’ section of Exchange Invest. DM for subscription options to the daily water cooler of the bourse business.

The LME’s Nickel contracts they’re finally in regular ours i.e. opening in Asia trading all the way through the European day and beyond after the Nickel nightmare of last year. Hopefully, the new night watch staff will avoid any future Nickel pickles.

European Union banks are facing punitive charges as the expiration of the Indian Clearing House permit with ESMA is nearing.

European banks using unrecognized Indian clearing houses face a sharp increase in capital requirements, from the current level of 2% of the bank’s trade exposure to the clearing house to leap to 1,250%.

This is frankly a dumb fiasco which – whatever the stubborn nature of Indian regulators reflects badly on the EU and ESMA as well as SEBI and India Inc too. While this mess has been unfolding, the Indian economy has been growing with continued alacrity while European Union stagnation has become quite the thing.

Moreover, it just demonstrates how de facto impossible it will be for the European Union to ever manage to corral Euro clearing into the continent of Europe’s clearing houses at the expense of the London clearing house and others.

Down under, massive moves, the Australian government has announced it will intervene in the ASX monopoly and hand regulators more powers.

I quote the Australian:

“By creating a framework for competitors to enter the clearing and settlement market – functions that manage payment, risk and changing the title of equities after they are traded – the laws could end up leading to the ASX’s monopoly being broken.”

The Albanese Labour government is doing what the reputedly more ‘pro market’ coalition could not manage to do despite years of dissent from many stakeholders: the ASX is on the cusp of losing its clearing and settlement monopoly in equities and not before time given the utter shambles of the Digital Asset non-delivery of a CHESS replacement.

Meanwhile, the Swiss Exchange SIX has said they’ve got no guidance to pause GDR Issuance by Chinese firms.

In results this week: A couple of headline numbers, the Tel Aviv Stock Exchange is growing rather nicely. Revenues and Net Profit both +12%.

Over at ATHEX (the Hellenic Exchanges), the Greek marketplace wasn’t quite so exciting earnings dropping by -23% despite turnover being up almost 5%.

In new markets this week: Very exciting news as Macau has got its stock exchange and what a fabulous CEO and backer it has, none other than Charles Li, the former CEO of the Hong Kong Exchanges, the man who brought Hong Kong – China connect to life.

In deals this week: MEMX has expanded its investor base with leading options firms Optiver, and it has led the equity rounds focused on supporting the growth of MEMX options.

An intriguing deal, I think, that makes options exchange 734 in the United States of America, or maybe it’s just 16 exchanges for US single names.

Elsewhere, by the way in deal news, we had that exciting inference that there are various parties out looking at LedgerX amongst them, Miami Exchanges.

Seismic index news of the week, Wilshire launches a new global indexing entity Wilshere Indexes.

It’s a seismic moment in indexing with the FT returning to the game and SGX joining as strategic partners, helping power the Mark “Mr. FTSE” Makepeace-led Wilshire on to even greater things. Mark will be running the index business going forward. All the very best to “Mr. FTSE”, and Andy Stewart will run the other Wilshire businesses.

Meanwhile, if you’re trying to understand just where the future of indexing fits in with everything amongst all manner of other exciting events in the world of markets, check out my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. The book is published by DV Books and you can collect a copy of “Victory or Death?” distributed by Ingram worldwide at leading bookshops across the globe.

While you’re waiting for your copy of “Victory or Death?” to arrive, don’t forget to check out our livestream Tuesday at 6pm London, 1pm New York time – the IPO video live show. Catch the back episodes on LinkedIn and YouTube via IPO-Vid.

Our most recent show marked a great milestone number 100. A cracking episode, it was James Block (founder of Dirty Bubble Media): Examining Dirty Bubbles. Absolutely a must listen, go catch it now, it’s archived on Facebook, LinkedIn, and YouTube. Search for IPO-Vid.

Coming this week: Another spectacular show number 101. We’ve got CNBC star Bob Pisani. He’s going to be discussing his new book Shut Up and Keep Talking.

Product news this week: The Trafigura chief is the latest to add his voice to the concept that the LME Nickel contract is simply ‘not fit for purpose’.

Trafigura CEO, Jeremy Weir noting and I quote: “The battery market is now the largest part of the industry, therefore the LME contract does not necessarily reflect the underlying structure of a large part of the industry. We have to have the contract or contracts to reflect the underlying business and we’ve just seen a major change.”

Let me help translate that for you. Those complaints about the Nickel contract have ranged from BHP to Trafigura at this point in time. So right across the gamut from the miners all the way to the traders, and I would anticipate that LME are listening keenly. I can’t discern exactly what the contract modifications ought to be although I can give you a hint, a key issue seems to be that we’re 57% of Nickel production met Grade 1 standards for delivery to LME in 2010. Nowadays, that number, not even 15 years later, has fallen below 30% and shows no sign of changing trajectory.

The problem is that the likes of nickel pig iron/matte are in huge demand for batteries helping change the profile of the metal being produced in order to meet that demand. Thus, we appear to have a disconnect in the LME futures from the physical clearing market in China which creates clear benchmark tensions. However, I am no metals expert so I’m happy to be corrected on this.

Over at Hong Kong exchanges: Excellent news, new specialist technology company listing rules are coming in. That’s going to help for pre revenue unicorns to manage to raise funds from March 31st.

And finally, is it genius foresight or perhaps the sign of a trend and uncharacteristic? Eurex, Deutsche Börse futures and options arm is the first European exchange to launch Bitcoin index futures.

Technology news and we start with the grim aftermath of the ongoing fiasco which was the several 100 million dollars thrown away by the ASX. The CHESS replacement project now there is a formal ASIC investigation by the Australian regulator which has been confirmed to ASX.

Ladies and gentlemen, we wait with bated breath. Is ASIC finally going to do something?

Regulation news this week: The SEC is looking at increasing the number of documents that no longer have to be in paper and can become electronic submissions. Given the desire to be more green led by Gary Gensler surely that’s the simplest ‘win win’ for the SEC and markets of all.

At the same time, Rostin Behnam went before the Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies Committee on Appropriations. In other words, the people who are going to release his budget for next year. What did that amount to? Well, some conspiracy theorists might see a direct correlation between the CFTC launching their action against Binance and its founder CZ on the next day Mr. Behnam being on the hill looking for his money for next year’s budget.

Career path this week: Great news at NASDAQ, they found an excellent replacement for Ed Ditmire, who left last year to head Investor Relations Stellantis (Fiat Chrysler etc). Perfect job for a petrol head like Ed me things. Anyway, Ato Garrett has been appointed Investor Relations Officer for NASDAQ Group.

Meanwhile, the former LME General Counsel Tom Hine joined Acuity Law as a Consultant Partner.

The LSEG appointed Dmitri Sedov as their new Head of Global Data, who’s joining from NASDAQ in New York.

Bourse Consult LLP announces the retirement of John Falk. All the very, very best to the man known as “Mr. Securities” at SWIFT when they were getting into the securities business in the 1990s.

Finally this week, Thomas Jardine joined BMLL US in the role of Customer-Facing Data Scientist. A pointy head who can talk to people.

In ‘Big World’: Last week marked 2 years since the world saw how hand brake turns in a “Fast & Furious” manner are not a good way to traverse the Suez Canal, especially when you’re in charge of the 399.94 meter, 20,124 TEU, Ever Given. Incidentally, the Ever Given itself was in Qingdao Harbour on the anniversary, presumably resting up before having a few beers to celebrate surviving its famous shuffle of 2021.

In the broader interweb, our social media this week was devoting some space to that epic moment in maritime history. However, there’s a fascinating twist to the story.

You might presume Evergreen, the company which owns Ever Given has been suffering since it’s off piste excursion blocked the fast way between the Med and the Red.

On the other hand, you might have discerned that with eye popping freight rates in recent times, it’s been a bit of a bumper year.

Evergreen reported a 39.82% jump in profit – a whopping $16.25 billion for the Financial Year 2022 according to the Singapore Straits Times newspaper. With consumer goods a huge driver, one might presume that Evergreen staff bow to shrines honoring the likes of Alibaba/AliExpress prior to bedtime.

Why are they buying? Well, the Taiwanese shipping company has indulged in what might be called a case of “Ever Giving” bonuses. While awards, of course, depend on individual staff performance but the average has been 10-11 months’ salary as a bonus for the 2022 financial year. That comes on top of an up to 50 month bonus paid last December. In other words, 5 years of salary have been available to Evergreen staffers across their 3,100 staff roster of payroll (Annual salaries incidentally at Evergreen range between $45,000 and $171,000 according to the jobs website comparably).

True freight rates have declined sharply in recent months, so 2023 bonuses might be lower but I suspect Evergreen staff will cope after receiving on average 5 years of added salary as a bonus during the course of the last few months, particularly as they have the last laugh mere months on from their infamous shipping problem.

And on that mysterious and magnificent note ladies and gentlemen. I wish you a great week in blockchain, life, and markets.

My name is Patrick L Young, publisher of Exchange Invest, and creator of markets the world over.


LME Nickel Finally Returns To Regular Trading Hours After Crisis

EU Banks Face Punitive Charges As Expiry Of Indian Clearing House Permit Nears

Government Announces It Will Intervene In The ASX Monopoly And Hand Regulators More Powers
The Australian

Swiss Exchange SIX Says It Got No Guidance To Pause GDR Issuance By Chinese Firms

The Tel Aviv Stock Exchange Reports The Results Of The Financial Statements For The Q4 And For 2022
PR Newswire

ATHEX 2022 Annual Financial Report

Micro Connect Launches Macau Exchange

MEMX Expands Investor Base With Leading Options Firms – Optiver Led Equity Round Focused On Supporting The Growth Of MEMX Options

Wilshire Launches New Global Indexing Entity, Wilshire Indexes
PR Newswire

Trafigura Chief Says LME Nickel Contract Is ‘Not Fit For Purpose

HKEX: New Specialist Technology Company Listing Rules

Gruppe Deutsche Börse – Eurex Is The First European Exchange To Launch Bitcoin Index Futures

CHESS Replacement Project – ASIC Investigation

Electronic Submission Of Certain Material Under The Securities Exchange Act Of 1934; Amendments Regarding The FOCUS Report

Testimony By Chairman Rostin Behnam Before The Subcommittee On Agriculture, Rural Development, Food And Drug Administration And Related Agencies Committee On Appropriations, U.S. House Of Representatives

Nasdaq Names Ato Garrett As Investor Relations Officer

Former LME General Counsel Joins UK Law Firm Acuity
Yahoo Finance

LSEG Appoints New Head Of Global Data
The Trade

Bourse Consult LLP Announces The Retirement Of John Falk
Bourse Consult

Thomas Jardine Joins BMLL US Team In The Role Of Customer-Facing Data Scientist