Apr 22, 2023 12 min read Exchange Invest Weekly Podcast

190 Exchange Invest Weekly Podcast April 22nd, 2023

Ameribor Swaps Owner, A Coup For eToro?, The London Stock Exchange Group Exits IT Sales

Transcript:

This week in the parish of bourses and market structure:

Ameribor Swaps Owner

A Coup For eToro?

The London Stock Exchange Group Exits IT Sales

My name is Patrick L. Young
Welcome to the bourse business weekly digest

It's the Exchange Invest Weekly Podcast Episode 190

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 (Monday-Friday).

More details at ExchangeInvest.com where you will also see our new website is in beta. Join us at ExchangeInvest.com to sign up for the Exchange Invests daily newsletter and read more of our free resources for all those interested in exchanges around the world.

In Bitcarnage this week: Gary Gensler made a rather emphatic statement.

“Make no mistake: many crypto trading platforms already come under the current definition of an exchange and thus have an existing duty to comply with the securities laws.”

Thus the SEC is seeking to redraw the battlelines once again in terms of what makes an exchange which has drawn cries of upset from the crypto world and the GOP commissioners but on the macro doesn't seem too far removed from common sense, even if it does mean that DeFi is a lot more difficult to achieve. But then again, when was it ever going to be easy to disintermediate the millennia old law and order systems of the world?

The SEC crackdown has continued, this week the exchange Bittrex was sued as it was working to close by the end of the month. Anyway, turns out Bittrex had previously been given a Wells Notice warning them that they were soon to be penalized.

If you've enjoyed this excerpt, you may be interested to know that you can read a Bitcarnage every day in Exchange Invest. Alternatively, if you want to follow Bitcarnage, the daily update on happenings in the world of crypto and digital assets, you can find Bitcarnage as a standalone on Substack.

In the world of legacy exchanges this week, Clearstream has created a new Luxembourg-based bank for global institutional fund investors.

ASX is consulting on the future of the ASX Managed Fund Settlement Service (mFund).

Twitter has partnered with eToro to show real-time stock and crypto information. What a fascinating possibility this raises. There will now be a zillion angry eyeballs from the Twittersphere. All honing in on data coming from eToro and they've got the option with a few click-throughs to buy and sell stocks, crypto, or other assets. That's got to be a coup for eToro while demonstrating an interesting e-commerce angle for Twitter and arguably making more relevant what we see as a platform which was struggling for relevance, hence it got Elon as an owner.

The bigger ramification for the data business may be - ‘how come it's a broker partnering with Twitter and not a vendor?’. Some days I wake up and wonder whether vendors realize they may be struggling for relevance without execution capacity…I can't say that's a definitive viewpoint on my part, but I would be worried if I were, Refinitiv, which remains an exercise in willfully avoiding strategic nous.

The London Stock Exchange Group has launched a new trading service supporting the best execution for retail brokers on Turquoise Europe.

The LME trial over the nickel trading debacle has been set for June 20th-22nd.

The Spectator this week run one of many articles which all had a similar thread. “The London Stock Market risks Sinking Into Irrelevance”, went the argument by Matthew Lynn.

He noted:

“It's madness to sit idly by and watch the London Stock Exchange dwindle into irrelevance. The LSE is too important for the City to allow that to happen, and the City is too important for the wider prosperity of the UK to be allowed to stagnate.”

What the media is actually missing right now is that the LSEG has essentially pivoted into being a post stock Exchange stock exchange group. Thanks to the ODD one’s obsession with Refinitiv - previously described as a form of “data Tourettes” within Exchange Invest. LSEG has an “am I bovvered” approach to its exchanges, as the old Reuters disease gradually undertakes a Stockholm Syndrome coup d'etat on LSEG management.

Apparently, LSEG is eager to create a corporate culture. I remain unclear what that means. Some say the LSEG is confused about what that means too.

It's 5 years since David Schwimmer was appointed Group CEO of LSE on April 13, 2018, it doesn't really look as if his markets have improved, and indeed, as we scooped in the Exchange Invest newsletter during the course of the last week the London Stock Exchange Group has even withdrawn from selling its technology for exchange matching, clearing and settlement engines, as it desperately tries just to cope with upgrading its own internal systems following the Refinitiv merger.

Of course, as I said, all that more was in this week's Exchange Invest keeping you ahead of the bourse business news. How can you possibly afford not to be paying $350 for that sort of information, ladies and gentlemen?

In a marked contrast over in the sort of country where they actually still value largely despite their poor government, the whole issue of markets, Speaker of the House of Representatives Kevin McCarthy made a fascinating 100-day visit to the New York Stock Exchange (that’s a hundred days since he was elected Speaker).

He himself noted:

“I chose to be here in many ways, this place represents the best of the American economy: fast-paced, future-focused, and dynamic.

For more than 2 centuries, this market has enabled dreams and changed lives for entrepreneurs and investors.

It has helped turn ideas into reality - generation after generation after generation. It pays pensions, funds, and education, builds hospitals, and supports charities- and it creates the incentives for solving challenges - and then helps to make those solutions widely available so we can live a better life.

Its impact is felt by every person, in every community, and in every corner of the country. And every other country wishes they had this too.”

What a fantastic speech, compare and contrast even that excerpt with the championing of the market with the poxy pygmies of British government who are muted markets, mute on stocks….we've already covered the abject failure of the London Stock Exchange Group to prioritize the London Stock Exchange in this bulletin alone, let alone within the pixels of Exchange Invest. But ultimately, that's what markets need, champions like Speaker Kevin McCarthy, which is why New York is such a great capital of capital at the New York Stock Exchange, and of course NASDAQ.

NASDAQ results were out this week, income before taxes +5.88%, an encouraging 10% increase in the quarterly dividend and overall another fascinating series of results which showed diverse product growth across the overall NASDAQ group. Congratulations to Adena Friedman and her team.

Suddenly not such good grew news from the Warsaw Stock Exchange, kind of flat too slightly off.

Tadawul in Saudi Arabia, dropped net profit by -35.4% as the Saudi Arabian Stock Exchange monopolist looks to invest heavily in the future of the Saudi Arabian markets.

Finally, Interactive Brokers announced their results with net revenues +64%, and income before income taxes of +93%. A powerhouse broker and one which doesn't need to manage to make a huge amount of money off its float of cash by endangering the safety of customers' reserves.

In deals this week: One very very exciting deal altogether, the American Financial Exchange plaudits to Richard Sandor on selling here his latest brainchild to 7Ridge the Carsten Kengeter and Veronica August's vehicle for investing in all sorts of parish related things but today it's mostly technology. An interesting side thought, of course, is that AFX was based on a close partnership with CBOE who are investors in 7Ridge.

Prophet Exchange is continuing to advance its peer-to-peer, high-frequency betting exchange in the USA, and they've raised over $10 million in funding.

Deutsche Börse has led an €8 million investment in Next Gate Technology.

If you're trying to understand what's going on in the future markets, don't forget you can always pick up a copy of my book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech world. That's a tome that is published by DV Books and distributed by Ingram worldwide.

While you're waiting for your copy of “Victory or Death?” to arrive don't forget to check out our livestream Tuesday 6pm London time, 1 o'clock New York time - the IPO Video live show. Check out the back episodes on Facebook, LinkedIn, and YouTube by searching “IPO-Vid”.

Our latest episode now online was a classic. We had the veteran former Deputy Chairman of the Chicago Mercantile Exchange, one of the architects of driving that market electronic James Oliff. He was talking about Markets In Electronic Transition.

Coming up next week, we've got Real Time Risks and that's going to be with another very well-known, long-standing figure in the parish of exchanges Alex Lamb.

Product news this week: The Warsaw Stock Exchange is expanding their GlobalConnect portfolio that's going to allow investors to come in and buy stocks from around the world. Interesting pair of first choices Jeronimo Martins and Inditex. Zara of course being Inditex (that's a mega brand in Poland as elsewhere around the world) however, Jeronimo Martins may require a little more explanation. Portugal's third largest supermarket chain is also a leading supermarket chain in Poland, thanks to some astute diversification by founder Jeronimo Martins when the Polish economy opened up as the Warsaw Pact crumbled.

The European Union is moving to clarify ‘sustainable’ investments after various funding downgrades.

The Nigerian Exchange and shareholders are recommending solutions on deepening the ETF market.

Egypt is beginning to offer corn on commodities exchange.

China’s securities watchdog has approved trading of the 30-year treasury bond futures. Let the Chinese yield curve trade commence in the futures and options market ladies and gentlemen.

Technology news this week was dominated by the London Stock Exchange's withdrawal from selling their technology for the matching of trades and also in clearing and settlement which was something that was scooped by our newsletter Exchange Invest this week. Don't forget you can sign up for a trial, go sign up now and visit the beta version of our new website at ExchangeInvest.com.

Meanwhile, major buy and sell side institutions have proposed their own user-governed consolidated tape for equities.

Frankly who in their right mind wants the data decided by a broker/dealer or a bank where there is a clear price conflict? Alas, the corporate socialist nature of the EU means this proposal may fly - even as it flies in the face of logic. Exchanges are agnostic as to the price traded, banks have a fundamental conflict of interest in that price formation. The European Union should see through this ridiculous fent and stop it, nipping it in the bud immediately. Tragically I doubt they will.

NASDAQ had a flurry of announcements, they led a ￡3.5 million Series A financing for Kuberno. Another governance solution to add to the NASDAQ portfolio which has been enhanced along with their risk platform to help banking and broker/ dealer community manage real-time risks. That was another announcement from NASDAQ this week.

Meanwhile, the IEX Exchange has enhanced its ‘Crumbling Quote Indicator’ to further protect investors amid volatile market conditions.

Regulation news this week: the CFTC and the Bank of England continue to recognize each other's clearing houses.

In other words, the most significant advocates and exponents of central counterparty clearing, the UK and the USA recognize, agree and can regulate each other. The European Union now sticks out like a jealous sore thumb with their dumb, vindictive divorcee act after Brexit.

The other news in regulation was what we refer to in Bitcarnage above the statement on alternative trading systems and the definition of an exchange by the SEC, reopening a comment period from last year, which looks to be likely to try and corral DeFi Cefi and much else besides into the existing definitions of exchanges.

Career paths this week: the boss of the London Stock Exchange David Schwimmer, who I mentioned earlier is now coming close to the 5th anniversary of his starting work having just passed the 5th anniversary of his being appointed. He started work on the 1st of August 2018 if my memory serves me correctly. Chief Executive Schwimmer could earn £8 million in pay this year despite growing pressure on the group. I wonder if that could be a fond farewell 5 years in, maybe it's time for new management, maybe it's time for a complete decapitation of the board, the management and everything else, the London Stock Exchange Group. I might say this you can possibly comment I know but at the same time, it is time for a revolution, a capital market revolution in the London stock market because the LSEG is failing to serve its end users.

The head of the Swiss Securities Exchange Thomas Zeeb the Swiss-Canadian executive who served as Global Head for Swiss Exchange SIX has now signed up to head the Fintica AI Advisory board.

Subhash Kelkar has joined the Bombay Stock Exchange as CTO.

CFTC Commissioner Christy Goldsmith Romero announces Yevgeny Shrago as Senior Counsel and Policy Advisor.

The SEC has appointed Deborah J. Jeffrey as Inspector General.

Singapore MAS has announced that the longest-serving chief of the Monetary Authority, the central banking regulator is going to be leaving. Farewell to Ravi Menon. He's going to be leaving at the end of this year.

Over the LSEG Group, some radical law announcements adding to the executive committee. Satvinder Singh is going to be leading LSEG’s Global Data & Analytics division and Ron Lefferts has been appointed to the LSEG Executive Committee effective immediately.

The other thing is the Executive Committee, of course, being a bit of a shambles, because people with profit centers generally don't tend to get there. It's full of HR and lawyers and general counsels and all sorts of people who qualify a bit into very important jobs but don't actually do anything that managed to sell the business. Therefore, having Lefferts who's effectively the Chief Revenue Officer of the London Stock Exchange Group has got to be ideal. Although at the same time, the appointment of Satvinder Singh to lead the LSEG Global Data and Analytics division, really rather beggars belief. For one simple reason, the brief for this job was we want an out of the box thinker. So they've added a man from MasterCard who spent his entire life in the world of credit cards and payments.

And in ‘Big World’ this week: The news media has been remarkably mute, not just it has to be said about our scoop concerning the LSEG pulling out of selling exchange technology. But the inevitable took place before Easter, much to the shagra of the UK’s many detractors. The United Kingdom joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which indeed we noted was going to happen in Exchange Invest several months ago. That means that 12 nations with a 15% of global GDP are now members of the broadly Trans Pacific Group.

In other words, that share of GDP is the same as the 27 nations of the European Union. The difference is that one group is experiencing dynamic and dramatic economic growth, the other is at best enjoying stagnation.

By 2050, this group could amount to a quarter of global GDP, whereas the European Union has seen its share of global GDP in perma-decline throughout the course of its membership or its existence despite growing in the number of nations for much of its history. Projections show the European Union as barely a tenth of global GDP by the time we reach 2050, which I think is frankly optimistic given the way things are going.

Anyway, this is fabulous news for the United Kingdom. It's fabulous news for the many economies of Asia, and it's an impediment to lingering elements of the sadly deluded UK blob so called ‘elite’ who so despite Brexit that they want to make Britain poorer at all cost. That may yet slow down the useless current government being replaced by an equally useless Labour Party at the next election. Who knows? Sadly the case for politics in the UK seems to be lost when it's a case of trying to make the overall positive message for markets.

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, creator of marketplaces the world over, a publisher of Exchange Invest and the Bitcarnage newsletters.

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

LINKS:

Clearstream Creates New Luxembourg-Based Bank For Global Institutional Fund Investors
Clearstream

ASX To Consult On The Future Of The ASX Managed Fund Settlement Service (mFund)
ASX

Twitter Partners With eToro To Show Real-Time Stock And Crypto Information
TechCrunch

London Stock Exchange Group Launches New Trading Service Supporting Best Execution For Retail Brokers On Turquoise Europe
LSEG

LME Trial Over Nickel Trading Debacle Set For June 20-22
Reuters

The London Stock Market Risks Sinking Into Irrelevance
The Spectator

Speaker McCarthy's Speech At The New York Stock Exchange
Speaker Gov

Nasdaq Reports Q12023 Results; Diverse Product Platform Delivers Broad-Based Growth

Nasdaq Announces 10% Increase In Quarterly Dividend To $0.22 Per Share
Nasdaq

GPW Group’s Stable Financial Results In 2022 In A Challenging Market Environment
GPW