Apr 29, 2023 15 min read Exchange Invest Weekly Podcast

191 Exchange Invest Weekly Podcast April 29th, 2023

A dangerous consolidated tape row, Nepalese stampede, NASDAQ Announce Co Presidents, Ronan Ryan’s impassioned IEX plea…, And it's a case of “deja vu one more time” for MIH and LedgerX

This week in the parish of bourses and market structure:

A Dangerous Consolidated Tape Row

Nepalese Stampede

NASDAQ Announce Co Presidents

While Ronan Ryan of IEX has made an impassioned plea against the mad, bad, dangerous to know and related vested interests to approach exchange reform sensibly.

And it's a case of “deja vu one more time” for MIH and LedgerX

Welcome to the bourse business weekly digest

My name is Patrick L. Young

It's the Exchange Invest Weekly Podcast Episode 191

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 we've got a groovy new website in beta. You can sign up right now for a free 30 day trial. After that it is $349 per user per year to gain your front row seat at the watercooler of the bourse business - the “Exchange of Information” Exchange Invest.

Over in Bitcarnage this week: We were celebrating the fact that Tay Tay Did Her DD.

I can recall a previous chairman of the CFTC (and a very good chairman at that) who was an unabashed fan of Cher, but I cannot recall any senior regulator coming out as a Swifty. They may wish to consider the option as it transpires Taylor Swift combined brains, beauty, and an elegantly inquisitive attitude which delivers captivating Due Diligence ability which ought to dazzle any regulator who has been disillusioned with the crass money grabbing of many current folks with fame. And indeed, the intersection of fame and cryptocurrency. Then again, it transpires not only did “Tay Tay” turned down $100 million deal with FTX because she asked the salient questions about whether or not she was dealing with private or public securities? It's so happens she has a father who was a stockbroker. And indeed, when aged 5 Taylor Swift of her own admission, used to tell people she wanted to be a stockbroker, even when she didn't know what a stockbroker actually did, but it was her daddy's job.

If you enjoyed this excerpt, you may be interested to know that you can read Bitcarnage every day in Exchange Invest. ExchangeInvest.com to sign up. Alternatively, if you want to follow Bitcarnage, the daily update on happenings in the world of crypto and digital assets as a standalone, you can find Bitcarnage on Substack Bitcarnage, delivering you all the news every day about the world of crypto exchanges, digital assets, and related market structure.

Over in the legacy exchange world, the Tokyo Stock Exchange is planning to extend its trading hours from November 2024. On November 5th Guy Fawkes Day no less, it will be expanding trading hours by half an hour to a closing point of 0630 GMT from 0600 hours.

Over in France, they didn't have to close the exchange but there were some ugly scenes as protesters stormed the Euronext headquarters, albeit they ended up in the reception area and no further. Nonetheless, it was dreadful optics even if the protesters were only occupying the foyer. Arguably it was all the more remarkable as La Defense (the Financial District into which the Euronext exchange has moved in recent years) happens to be a lot less central than the former SBF HQ in Rue Cambon or indeed the old historic floor at the Palais Brongniart (nowadays a club and also a conference venue although that particular position in Palais Brongniart) has been heavily defended for decades.

Over in the USA, we're celebrating an incredible milestone, 50 years of US Options trading, the Chicago Board Options Exchange (Cboe) marking its 50th Anniversary on April 26th. Meanwhile, still on the topic of CBOE, NEO Exchange is now operating us CBOE Canada.

IEX co-founder Ronan Ryan has been commenting that opponents of many of Gary Gensler Stock Exchange reform are either ‘insane’ or talking their own book. Ronan Ryan was of course, our guest on IPO-Vid # 11 which is now also a podcast as well as being our Youtube, Facebook and LinkedIn livestream. And I must say I admire Ronan's pithy candour. It’s a thought provoking topic…

Over in Kenya, rich investors are going to be able to buy extra shares without approval from the regulators, the CMA.

At the same time, I'm not particularly sure that enabling concentration of Kenyan stock ownership further into the hands of the wealthy oligarchy is really such a great leap forward? We shall see.

The FT had the second part of a quite good two part series, discussing aspects related to capital markets. We'll get to that in a minute. But they also highlighted the last-ditch challenge from exchanges over trading reforms. That's all to do with the whole concept of a unified consolidated tape and more.

The problem, of course, remains that the European Union has blind faith in the multitude of banks at the expense of the exchanges and other market structures. Actually, the markets themselves, it remains a blot on the corporate socialist landscape of Brussels. The willful damage potentially being brought upon exchanges across Europe is a huge issue. And it's a huge issue for the broader economy as well as the exchanges themselves. It's clear that EU markets need to be much better but then again, the problem is the European Commission, the European Union, tend to have a politically knee-jerk anti enterprise culture.

It could be that the problem isn't the markets, the problem is the top down blob, who are once again seeking to engineer champions, which has to date never ever worked in the history of the European Union, or indeed in the history of the USSR and other communist entities.

Going back to that series, the FT had two parts Britain’s ‘Capitalism Without Capital’: The Pension Funds That Shun Risk and How Europe's Bourses Failed To Challenge The US. It's all about Europe's problem with equity markets. And certainly the first headline was absolutely correct. London has a shambolic ‘risk off’ investment fund community, which is throttling risk taking investment and thus innovation.

The second part is much more complicated, especially of course for the Brussels bugle to report because it must balance against its inherently corporate Europhilia and the fact that indeed, its largest zone of subscribers happened to be in Brussels, alongside London, the traditional headquarters of the Financial Times.

The European Union's failure as a wannabe great power as well as an invasive top down growth standing bureaucracy is the problem and competing with the US which - despite Joe Brezhnev as president and a string of useless New York mayors - and indeed useless mayor's in many of the major financial centers, the United States of America continue to deliver efficient capital markets that raise money, involve risk and encourage risk taking, delivering higher valuations for companies thus creating greater value than Europe. The FT is sniffing that America has booms and busts, whereas Europe has, er, help me here? Europe has booms and busts too. It just strikes me they're not so good at recovering every time the European Union goes down. It has difficulty making new highs every time America has a problem. That periodic difficulty leads to spectacular new highs in the near term.

In essence, the UK and EU have insufficient risk encouragement, too much bureaucracy and are in danger of vilifying entrepreneurship unless it produces vegan handbags or something of the ESG ilk.

In results this week: It was a very busy week for results in the parish around and about, it has to be said, the pure exchange business. Two highlights: MSCI reported their results for Q1. Operating Revenues of +5.8%, Diluted Earnings per share +6.8%. Meanwhile, tech vendor Fiserv, their revenue was +10% after adjustments and their Adjusted EPS was +13%.

In new markets this week: We have another new SEF. Even more excitingly, not only have the 24 SEFS but this SEF is actually a proper swap based swap execution facility rather than a crypto market or something else which has been a bit of a trend recently. RTX SEF is a single-member limited liability company registered in Delaware and headquartered in New York City. Good to see the SEF ranks growing again and indeed this particular facility looks fascinating trading and swaps and swaptions and related products.

The BSE’s MD & CEO Sundararaman Ramamurthy has been delivering creed occur “India requires more than one vibrant exchange, and hence the need to make BSE more vibrant. We're trying to differentiate by tweaking our product offerings.”

There have been some issues over market maker payments as we were discussing last week in Exchange Invest Newsletter, which has been provoking dwindling Exchange Traded Derivative volumes in Q1 on BSE. Clearly, BSE has issues finding relevance against the ongoing juggernaut of the National Stock Exchange despite all its travails. At the same time, the argument that India needs more than exchanges is absolutely spot on. Take for instance, the extent of China's perma growing exchange industry. By comparison, the enforced closure of many venues by SEBI in the equity arena alone during the past decade has been a fiasco in the development of India's market economy.

One thing that isn't a fiasco, in India's market economy is the new market IFSC-SGX Connect is going to be operational of the Gujarat International Financia Center (GIFT City) which means that finally you'll be able to trade those Nifty and hopefully the SGX’s successful liquidity will transfer into the financial center and back out to the world. It'll be very interesting moment to see how well trusted this is after the great standoff between SGX and a politically motivated Indian blob, which was trying to ban the Nifty futures overseas earlier this decade.

Nigeria is going to be establishing an ‘energy exchange’ to trade power.

In the Himalayan, we have an avalanche in Nepal of new exchanges looking to open up. According to SEBON (the regulator) the Himalaya Stock Exchange, National Stock Exchange and the Annapurna Stock Exchange have applied for regulatory approval to start the stock exchange business, this after a recent deregulation of the rules in terms of stock exchanges being allowed to open.

Likewise, the Nepal Multi Commodity Exchange, the Himalayan Commodity and Derivative Exchange, the Multi Assets Derivative Exchange and the Multi Derivative Exchange are among the aspirants to create commodity and derivative exchange markets.

Quite incredible for a country of barely 20 million or 30 million people nonetheless great to see more interest in new markets.

Over in Nigeria, Lagos has signed an agreement on financial instruments for the commodity market.

In deals news: It was a busy week for deals in the parish of exchanges. All those deals were in Exchange Invest Daily the newsletter no person can afford to be without in capital markets and market structure. Sign up now at ExchangeInvest.com. For the sake of this podcast, let's look at some edited highlights.

MIH (Miami International Holdings, the parent company of the Miami International Exchange Group) have bought LedgerX. It may not be a huge amount of money in deal terms, but it is a fascinating prospect.

We had heard that MIAX and prediction market Kalshi had shown particular interest along with the likes of OKX, Gemini, Blockchain.com and Bitpanda in this US CFTC regulated platform, which of course had been bought by FTX and ultimately therefore was a victim of the collapse of that fraudulent entity.

In the case of Miami buying this particular market, it's a case of ‘deja vu one more time’ at least for my MIAX or its parent MIH as they originally invested in LedgerX back in 2018. That had a number of subsidiary benefits in terms of product licensing rights and technology agreements for MIAX, which therefore has now followed through into a very interesting prospect.

Given that LedgerX was the only plausibly ‘clean’ asset in the FTX portfolio, the ultimate value achieved, a $50 million is hardly going to turn the needle on repayments to creditors…At the same time, it's a decent price for the average M&A hounds at MIH, who deserves plaudits for swooping in on a deal that has synergy for them through tech relationships and product licenses, etc etc.

AFEX in Nigeria is enhancing their agribusiness with $10 billion worth of trade taking place in Africa.

TP ICAP has taken a minority stake in the very interesting low code, no code, platform iPushPull.

Finally this week, Valereum (which of course, you will recall Patrick L. Young, that's me, is an executive director of) we have sold our bitcoin mining assets to a new company Vinanz. Vinanz has successfully listed on the Aquis Exchange under the ticker symbol BTC. We wish them every success in the future.

Meanwhile, if you're trying to understand all about everything from crypto mining through the world of FinTech and beyond into the realm of exchanges. Bear in mind ladies and gentlemen, you can read my latest book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World that 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 6pm London, 1 o'clock New York time - it's the IPO video live show. Catch the back episodes on LinkedIn and YouTube via “IPO-Vid”.

Our most recent show was an epic discussion of Real Time Risks dating back through 40, nearly 50 years, I think, all the way to the present and beyond. We were discussing real time risks with FinTech guru, former trader, former broker and long standing figure in the parish of the markets of exchange derivatives Alex Lamb.

Our next show upcoming is going to be IPO-VID #104 on Tuesday. That will be at our usual time 7pm Central European Time, 6pm London time. We're talking to academic Rainer Zitelmann he will be discussing In Defence of Capitalism.

You can catch all our shows. Just go Google “IPO-Vid”. They are live streamed and archived on Facebook, YouTube and LinkedIn.

Product news this week: The CME Group have completed a series of key milestones in the conversion of the Eurodollar futures, options and cleared swaps to SOFR-based derivatives. At the same time the CME Group have announced they're not planning to launch a Nickel contract to rival the LME.

China had perhaps even more seismic news this week, they're launching their first batch of 30 year treasury bond futures. Very, very exciting news in deed.

Wall Street is getting a new fear gauge to celebrate the 50th anniversary of CBOE There's going to be a new one day VIX contract being launched by CBOE Global markets.

NASDAQ have expanded their suite of indexes into new themes and regions while Turkish IPO rules have been changed.

As I say, a frantic week in product news, there was lots lots more and all of it was on Exchange Invest.

Over in technology: Market Data spend has hit a record $37.3 billion according to UK Daily News.

IBM is going to be helping the New York Stock Exchange listed companies with their ESG efforts.

Delta Capita has announced their new Distributed Ledger Technology venture with Montis as anchor client.

In regulation news: The Indian regulators are planning to allow mutual funds to charge performance based fees.

The CEO of Virtu (the kings of payment for order flow) is slamming Gary Gensler reforms at this juncture and saying it's a plan by the Democrats to curb retail trading.

The FCA have caught up with the zeitgeist of the last year and they've set out recommendations for improving the LDI management. Telling LDI funds to stress test the buffers for market shocks. That is, of course a matter that's now been deemed ‘urgent’ by the UK regulator that caused the resignation of a British Prime Minister over six months ago, when many deemed the Bank of England to be asleep at the wheel.

Career paths this week: NASDAQ have appointed new co presidents. Congratulations to Tal Cohen and Nelson Griggs on their elevation. Adena Friedman remains chairman and CEO.

The Abu Dhabi Securities Exchange has appointed a new Chief Executive Abdulla Al Nuaimi is replacing Saeed Al Dhaheri , who had been CEO since 2020.

Interim chairman of the board of the London Metals Exchange replacing the outgoing Gay Huey Evans is going to be John Williamson, currently an LME board member and a long standing Hong Kong Exchanges director that became effective on April 25th.

A little bit of parish news, Bob Greifeld (who was NASDAQ CEO and rather transformed that business from 2003 to 2016) has moved on to other ventures including the launch of Cornerstone FTM, a financial technology focused Investment Fund, and is therefore standing down as chairman of Virtu financial while Vinnie Viola’s son Michael is elevated to Chairman.

And that leaves us in the metaverse. It seems to be a case of virtual paradise postponed for now. Microsoft has disbanded its industrial Metaverse unit, which was tasked with making software for purely virtual manufacturing operations. In essence, Microsoft wants others to develop tech in their mobiles or encourage it to use Microsoft's operating system. Apple appears to be abandoning actively promoting its VR headset too while over at Meta, it's a bit of a bloodbath, having lost $13.7 billion in 2022 as a result of heavy Metaverse investment. Disney likewise is pulling out.

In the case of Exchange Invest and indeed our publisher (yours truly Patrick L Young) we only wish that Facebook could get back to their knitting and for instance, ban the shadow profile which copied my details a year ago and has been involved in scams and other issues related to crypto for quite some time - to date Facebook have done nothing, that suggests Facebook have much more fundamental problems than merely their premature metaverse folly!

And on that mysterious and magnificent note ladies and gentleman, my name is Patrick L. Young, creator of marketplaces the world over, publisher of Exchange Invest and Substack respectively, the newsletters of market structure in the world of all assets and indeed, specifically crypto and digital assets.

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

LINKS:

Tokyo Stock Exchange Plans To Extend Trading Hours From Nov 202
Yahoo Finance

France, Protesters Raid The Paris Stock Exchange
WSJ

Options Trading Today After 50 Years Of Growth
Investor's Business Daily

NEO Exchange Is Now Operating As Cboe Canada
Cboe Canada

IEX Founder Ronan Ryan Says Opponents Of Gensler Stock-Exchange Reforms Are Either 'Insane' Or Talking Their Book
Morning Star

Rich Investors To Buy Extra Shares Without CMA Kenya Approval
Business Daily

EU Faces Last-Ditch Challenge From Exchanges Over Trading Reforms
FT

Britain’s ‘Capitalism Without Capital’: The Pension Funds That Shun Risk
Financial Times

How Europe's Bourses Failed To Challenge The US
Financial Times

MSCI Reports Financial Results For Q1 2023
MSCI