13 min read

223 Exchange Invest Weekly Podcast December 9th, 2023

This week in the parish of bourses and market structure: LME Defeats Elliott, And Thus LME Reboots, As There Are Winds Of Trading Change In Hong Kong, LCH Cuts Fees, NASDAQ Wins The Nuam War, And LSEG Remind Us Why They Dropped Off The Shortlist Of This Tender


This week in the parish of bourses and market structure: 

LME Defeats Elliott 

And Thus LME Reboots 

As There Are Winds Of Trading Change In Hong Kong 

LCH Cuts Fees

NASDAQ Wins The Nuam War

And LSEG Remind Us Why They Dropped Off The Shortlist Of This Tender, As Their Systems Fall Over In LSE Once Again 

My name is Patrick L Young

Welcome to the Bourse Business Weekly Digest

It's the Exchange Invest Weekly Podcast Episode 223

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 Daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox. 

More details at ExchangeInvest.com  

Is there a threat to the reign of tether?

Dirty Bubble Media whose principal James Block was our IPO featured guest on Episode 100 Examining Dirty Bubbles has been writing a couple of pieces about  tether. First of all, there was Tether’s Secret Agent about the secretive Christopher Harborne, who “has a mysterious past, vast wealth, and deep political connections. Is he also the brains behind the world's largest stable coin? - asks James Block. 

SBF Was Almost Extorted For ‘Protection' In Brooklyn Jail, Recalls Ex-Inmate - Cointelegraph - presumably the trade fell flat when SBF offered to pay for his protection in FTX tokens. Nonetheless, this is an ugly reality of how life will soon be for his fellow criminal Binance founder CZ and already is, for SBF for the foreseeable future. 

Meanwhile, the folks who believe in capitalism as opposed to effective altruism at the AEI have been pondering: Why Did America’s Elite Keep Falling For Crypto Frauds?

Elsewhere, the bankless times profiles a firm which leaves me uncertain whether to laugh or cry: New Trends: Crypto Futures Exchange Meets Casino an article which goes on to note that “rollbit combines an online casino, crypto perpetual futures exchange, and sportsbook into one big gamified hub for wagering crypto.” 

Presumably, there's a DeFi app for flies crawling up walls as well. 

…Albeit crypto needs, I think, to be seen in perspective. The entire market is worth $1.5 trillion as I type, which makes the realm of crypto smaller than the market capitalization served by the Taiwan Stock Exchange and - thanks to recent BTC gains - it's a relative whisker above the Johannesburg Stock Exchange…or to put that in perspective, the world's 18th / 19th sized exchanges respectively. 

Cointelegraph notes Binance Is Now ‘Totally Different’, something which ought not to be barked out but I'm afraid it's still Puppy Training round here at Young towers, so therefore the puppies are in the background. In that interview with Richard Teng, I can readily sympathize with him as I'm sure dealing with the Canadian founder CEO was a major challenge. At the same time, Teng has his work cut out of finances, as his company sits on a knife edge here of whether crypto is a Howey test acceptance or rejection and that appears to be the crux of their failure to settle so far with the SEC. That's in addition to of course the plea they made for $4 billion with the DOJ. It's altogether fascinating that the SEC is still holding out against Biden's post criminal conviction. 

At the same time, disappointingly, Teng refuses to name the headquarters of Binance, in that respect, Binance alone can only be seen as a tarnished platform of opacity.

Meanwhile, back on to tether secret loan portfolio Dirty Bubble Media has been a wealth of insight. There was a second examination by James Block looking at that secret loan portfolio. The whole nation of ‘stablecoins’ has been viewed by many as somewhat of a euphemism for often risky assets and many might perceive Chinese Commercial Paper in the mix may not be to everybody's liking…The total smoking gun is not yet readily 100% visible but there is a lot of smoke, possibly quite a few mirrors, and certainly a lot of questions arise from what we can try to understand about the balance sheet of the so-called ‘stablecoin’.

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

Bitcarnage | Exchange Invest Bitcarnage | Substack
“Bitcarnage” by fintech pioneer Patrick L Young, is a spinoff from the daily bourse business bulletin “Exchange Invest.” Subscribe to understand crypto market dynamics from a team which successfully predicted the decline of FTX etc…. Click to read Bitcarnage, by Exchange Invest Bitcarnage, a Substack publication. Launched 8 months ago.

From Bitcarnage to the world of legacy exchanges, ICE has been awarded $155 million for PennyMac misuse of Black Knight confidential information and mortgage servicing software a handy stipend and a useful exercise of copyright IP infringement. 

At the same time, the Hong Kong Exchange has started its consultation to allow trading on stormy days. The winds of change are almost upon Hong Kong as they open this consultation allowing trading on typhoon days while a simultaneous sigh of relief is of course audible as Hong Kong Exchanges looks to the future of subsidiary LME post the #NickelNightmare lawsuit failing in court. 

The barrier to winning was always high even though there were issues with the LME’s market operations. LME still clearly has issues to deal with and its new clearing house management team needs to promote the excellence of their product. However, the court case conclusion is a very good thing for LME and London's markets that they are escaping the cloud of the Elliott lawsuit, which could have had catastrophic consequences. 

Not quite catastrophic consequences yet, but very, very deeply, profoundly embarrassing territory for the London Stock Exchange, and its parent, the London Stock Exchange Group, a third recent tech failure within its matching engines in as many months for the London Stock Exchange is a coyote ugly demonstration of how LSEG has lost its way, unable to cope with a welter of upgrades, forcing it to withdraw from selling matching engines and now it seems even though basic IT is not able to cope due to the pressures of the Refinitiv acquisition.

Euronext has announced the successful expansion of Euronext clearing as pan-European clearing house for Euronext cash markets. A sound execution as Euronext makes hay from the gift of Borsa Italiana from the London Stock Exchange group's overly hasty disposals in order for it to acquire Refinitiv. 

No sooner than Euronext new CCP is limbering up than LCH.Clearnet cuts equity clearing fees. 

SIX subsidiary BME in Spain has entered the battle for CCP on Euro swaps.

Former LIFFE board member Rupert Lowe - legend on the golf course according to some who can recall his LCH golf day performances - may have his detractors in places but in his political career era of late (he was a Brexit Party MEP just as the UK left the bloc) he hits the mark perfectly with his Op Ed in The Telegraph of the course of the last week espousing a major subject PLY has been noting for quite some time: risk mojo has evaporated in London's equity markets while regulation is throttling the exchanges themselves.

Dreadful discussion, very very gory stuff coming out of Israel this week. Ultimately, the Tel Aviv Stock Exchange denied reports of exceptional unusual trading ahead of the October 7th Hamas attack that was based upon refuting an academic paper trading on terror by two years academics certainly seems to be some smoke with fire in there but at the same time, the scale does not seem to be in remotely as large as expected, because apparently, the academics may have mistaken pretty much the decimal point of where the short selling was in terms of its total extent.

Nord Pool Exchange meanwhile, talking about errors of a certain extent they're going to be vetting unusual bids more closely after the recent finish fat finger error we talked about last week.   

In results, not such a busy week for results, but we had the Santiago Exchange reporting earnings for the third quarter 9 months ended September 30th 2023. Not such a good quarter overall, net income -88.4%. 

The Bulgarian Stock Exchange on the other hand earnings per share almost tripled during the course of the year on year from 3rd quarter 2022 to 3rd quarter of this year. 

In deals, just one interesting deal speculation the Osaka bourse is in talks to buy Jasdaq. That would be an intention to unify the Japanese SME market around the Osaka bourse with Jasdaq being 70% owned by the securities dealers association of Japan. That would leave Fukuoka and Nagoya the only independent forces away from the JPX Group monopoly.

If you're trying to get your head around monopolies in markets, technology developments and much more, you ought to be looking at a copy of my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. It's a way to understand how technology is affecting life and markets. And I mean very much your life in this respect. Check it out on Amazon. It is distributed by Ingram worldwide and “Victory or Death?” is published by DV Books and can be bought in good bookstores everywhere. 

While you're waiting for your copy of “Victory or Death?” to arrive, check out our live stream Tuesdays at 6 o'clock London time, that's mid-day New York time -  it's the IPO video live show. You can catch the back episodes on Linkedin and Youtube via “IPO-Vid. Our next show coming this week on the 12th of December is going to be Episode #127 with the boss of ICE Futures Europe, Chris Rhodes coming to us from the London Ice House.

That leads   us neatly to our ‘Finance Book of the Week’ and how appropriate that we should have chosen “The Intelligent Investor” by Benjamin Graham is one of the most famous investment advisors of the 20th century, the man behind the core philosophy of “value investing” which was used, of course by none other than the great Warren Buffett and still is, and the late great Charlie Munger of Berkshire Hathaway, who passed away this past week at the age of 99. Is Graham Still Relevant today? it's a vital read. But indeed, as Charlie Munger himself has pointed out, it's not the entire Holy Grail of modern investment. Nonetheless, a must read a book, you can get that on the usual bookstore sources, you can also catch a link on our page ad ExchangeInvest.com

And don't forget if you want to stay up to date with all the news on the bourse business sent daily to your inbox, subscribe to Exchange Invest ExchangeInvest.com It's only $349 per annum to join the exchange of information. 

Our next book of the week will be unveiled on Saturday in the free EI Weekend Edition which you can also sign up to by going to ExchangeInvest.com

In product news this week, China's Dalian Commodity Exchange is going to be further strengthening iron ore future supervision. 

Carbon credit derivatives linked to the COP 28 conference presumably this announcement, is getting more scrutiny from the US CFTC. 

SGX Group and Shanghai Stock Exchange have debuted their first pair of ETF-linked products as SGX readies to list active ETFs.

Abu Dhabi Stock Exchange has launched an ESG benchmark index in association with index provider FTSE.

Technology news this week, the headline is Nuam Exchange and NASDAQ formed a strategic technology partnership to develop new marketplace in Latin America. 

You may recall Nuam is the brand name of the merged Santiago, Lima, and Colombia stock exchanges under CEO Juan Pablo Cordoba. I think this deal was broadly expected given the Nuam Exchange had originally LSEG on its shortlist and LSEG abruptly withdrew from selling tech (too late it seems alas) to focus on their upcoming systems, I mean updates,  we mentioned this earlier, 3 articles in 3 months pretty shameful stuff from the London Stock Exchange recently definitely dragging down the reliability of the parish as a whole. Anyway, the Nuam sell is a great result for NASDAQ. It'll be interesting to see what becomes of the dev team within Nuam itself (specifically in the Santiago, Chile Stock Exchange) as a result of the merger of the exchanges and the use of NASDAQ as a core IT infrastructure going forward.

Also talking about NASDAQ tech this week, they launched new technology to scale global carbon markets. If you want to catch more and learn more about Puro Earth, which is highly correlated to the NASDAQ carbon technology, don't forget NASDAQ Stockholm Fredrik Ekström, the chairman of Puro Earth was our IPO-Vid guest on Episode 052: “Puro Carbon - Nasdaq Transforming Emissions”

BMLL our dearly beloved sponsors along with NASDAQ, has added a Shanghai data completing their Chinese equity data offering. That complements existing Chinese data from the Shenzhen and Hong Kong equity exchanges; all now available in one consistent format, in the BMLL Data Lab. Bravo BMLL! 

And the note, if you're a reader of Exchange Invest Daily, you will now be able to find the monthly BMLL liquidity maps on the 3rd Thursday of the month Europe and the 4th Thursday of the month in the US data respectively in our daily subscriber newsletter. 

News about TCS (the people who just won the contract for the Australian Stock Exchange despite the fact that they seem to have a bit of an issue with delivering a lot of their exchange projects on time and on budget. TCS of India face a $210 million penalty in a lawsuit about insurance banking software from DXC.

Better news to finish off technology for this week, Aquis Stock Exchange has become the first to adopt cloud-based matching engine technology as a UK regulated market. Regulation news this week, the SEC’s in-house enforcement powers are at risk in a US Supreme Court case. The overreach of Gary Gensler as chairman may be approaching a bloody denouement for the agency with SEC in-house enforcement powers at risk in an ongoing Supreme Court of the United States of America action. 

Elsewhere, risk notes on the same sort of SEC theme how the agency is being criticized for its belt and braces ban on volume-based pricing. 

And quite right too - it's a ludicrous suspension of transactional common sense by an anti-commercial / fundamentally naive (delete as appropriate) SEC panel of commissioners. 

Career paths this week, the CFTC has appointed Melanie Devoe, Director of the Office of Customer Outreach and Education.

MSCI has appointed a head of index, Jana Haines who's joined the firm as head of index and a member of MSCI’s executive committee from the fund ARK invest. 

Finally this week in career paths, Trading Technologies has taps three experienced capital market business leaders for new senior management roles effective from January 1st 

Shake up at TT CEO Keith Todd firms up senior management: former Fidessa veteran Justin Llewellyn-Jones will assume the COO role; long-term broker Christopher Heffernan will lead a fixed income business line; Fidelity alum Alun Green will oversee futures and options. We wish good luck to all three in their exciting new roles under Keith Todd, who was our guest on IPO-Vid #066: Delivering SaaS through TT.

In BigWorld:

Apparently, there's a proposed solution afoot to enable Russia to maintain better communications with its annexed Crimean territory. The answer is boring: a Sino-Russian built tunnel under the Kerch Strait removing the reliance on the 11-mile bridge which has been constantly attacked since Russia's 2022 invasion of Ukraine.

That the Chinese Railway Construction Corporation (CRCC) has expressed interest in constructing the tunnel is interesting as until now China has shied away from recognizing the Russian annexation of Crimea, but I suppose business's business. 

Then again, looking further afield and way above the level of boring into the earth. You may recall I was recently a signatory to the letter published by the Financial Times "City Looks To The Chan­cel­lor To Real­ise Space Ambi­tion." I'm quite fascinated by the opportunities for the space economy, including within the parish of exchanges, having recently attended a symposium on the space economy in Guildhall, in the heart of the City of London as move are afoot to make the UK a key space economy financial center.

…And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young founder and publisher of Exchange Invest the exchange of information and a builder of marketplaces, bourses exchanges and related infrastructure the world over. 

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


ICE Awarded $155 Million For PennyMac Misuse Of Black Knight Confidential Information In Mortgage Servicing Software

Hong Kong Exchange Starts Consultation To Allow Trading On Stormy Days
The Wall Street Journal

London Stock Exchange Is Hit By Third Outage Since October

Euronext Announces The Successful Expansion Of Euronext Clearing As Pan-European Clearing House For Euronext Cash Markets

LCH.Clearnet Cuts London Equity Clearing Fees

SIX Eyes Euro Swaps Clearing As European Rules Take Shape
Global Investor Group

Tel Aviv Stock Exchange Denies Reports Of Unusual Trading Ahead Of Oct. 7 Hamas Attack
NY Post

Nord Pool Power Exchange To Vet Unusual Bids More Closely After Trading Blunder

Bolsa de Comercio de Santiago, Bolsa de Valores Reports Earnings Results For The Third Quarter And Nine Months Ended September 30, 2023

Bulgarian Stock Exchange AD Q3 2023 Earnings: EPS: лв0.64 (vs лв0.26 in 3Q 2022)
Simply Wall St

Osaka Bourse In Talks To Buy Jasdaq Market - Paper

China's Dalian Commodity Exchange: To Further Strengthen Iron Ore Futures Supervision

Carbon-Credit Derivatives Get More Scrutiny From US Regulator

SGX Group And Shanghai Stock Exchange ETF Product Link Debuts First Pair Of ETFs

SGX Group Readies To List Active ETFs

Abu Dhabi Stock Exchange Launches ESG Benchmark Index

Nuam Exchange And Nasdaq Form Strategic Technology Partnership To Develop New Marketplace In Latin America
Globe Newswire

Nasdaq Launches New Technology To Scale Global Carbon Markets

BMLL Adds Shanghai Data; Completes China Equity Data Offering

TCS Faces $210 Million Penalty In DXC Lawsuit
The Economic Times

Aquis Stock Exchange First To Adopt Cloud-Based Matching Engine
The Trade news

SEC's In-House Enforcement Powers At Risk In US Supreme Court Case
Yahoo News

SEC is being Criticised For its Belt-And-Braces Ban On Volume-Based Pricing

CFTC Chairman Announces Melanie Devoe Director Of The Office Of Customer Education And Outreach

MSCI Appoints Head Of Index

MSCI Appoints Head Of Index From ARK Invest
Yahoo Finance

Trading Technologies Taps Three Experienced Capital Markets Business Leaders For New Senior Management Roles, Effective Jan. 1
PR Newswire