11 min read

229 Exchange Invest Weekly Podcast January 27th, 2024

This week in the parish of bourses and market structure: Magna Carta For Markets? It’s the MicroConnect MAP, Tadawul Rescues DME, NYSE Pulls Back From Its Land Grab, Gary Gensler Gets T Bonds CCP Clearing, & IMX Is Cleared To Build the First Health Futures Exchange


This week in the parish of bourses and market structure: 

Magna Carta For Markets? MicroConnect Release Their Magnificent MAP

Tadawul Rescues DME

NYSE Pulls Back From Its Land Grab

Gary Gensler Succeeds In Getting T Bonds Onto CCP Clearing 

And IMX Is Cleared By The CFTC To Become DCM17 And Build The World's First Health Futures Exchange

My name is Patrick L Young

Welcome to the Bourse Business Weekly Digest Episode 229

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  

Parish notes was led this week by news that Tadawul had rescued DME.

Tadawul are investing $28.5 million for 32.6% stake equaling the share of the now reduced CME holding as clearly DME get some form of rescue and the fascinating opportunity to grow for the future under Saudi ownership. They have an option incidentally to buy the whole thing in a 4 to 5 years time.

No changes to the dominant Oman futures contract which remains essentially an exchange delivery mechanism while IFAD under the management of ICE have built the only significant oil curve in the Middle East to date via Abu Dhabi global market.

At an Enterprise Value of $87.5 million, clearly Tadawul sense a big opportunity in energy and broader commodity markets with what will become the renamed Gulf Commodity Exchange. 

Over in Bitcarnage, we were pondering the question of “Irresponsible Parenting?” in what is surely the most #Zeroshock moment in the whole FTX/SBF farago, his parents remain in some form of abject denial. You may recall his Mother's mega-screed in the Boston Review, which we discussed in December 2022 in Exchange Invest, which effectively said guilty folk are not guilty or anything (at least that's my paraphrasing). Well now, would you believe it, the SBF parents are pushing to dismiss the lawsuit against them seeking the return of gifts made to them when SBF was riding high on the hog of other people's money…

That includes no less than a $10 million cash gift from FTX and also that $16.4 million villa, which they seem to try to dismiss as a kind of beachside dorm room for FTX staff which was according to the Bankman-Fried family given to them… It's truly difficult to have any sympathy for the whole family in this farago - lifelong socialists eager to hang on to their booty from their son's criminal, fraudulent empire. 

If you enjoy 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 a Bitcarnage as a standalone on Substack

The New York Stock Exchange this week they pooled their plans for an environmentally sustainable asset class. 

Ultimately, Natural Asset Companies were a step too far for NYSE as many complained it could create vast monopolies and tracts of land, which would be effectively reduced from productive use. That contrasted with the tale of activists seeking to derail the JBS meatpacker IPO due to concerns over their environmental credentials. 

The JBS meatpacker IPO really does impact the parish. Never has there been a concerted move that I can recall to preclude such a listing by a financially compliant enterprise. It's a worrying case of bracket creep alongside the Gary Gensler SEC's eagerness to legislate environmental solutions. These are worrying precedents. I have no idea how good or bad JBS are, while media certainly doesn't dazzle, and “sustainable paragon of virtue” style reporting is anathema to the JBS story, it seems. 

Then again, this is the US media which if Trump said he was a vegetarian, the meeja would be affixing a free cow to the masthead of their print editions. However, with regard to the JBS listing, specifically subjective judgment on what is or is not acceptable to list on exchanges is a slippery and highly dangerous slope. 

And indeed, should we not believing such a choice to Mr. Market? 

No results this week but lots of excitement in new markets, the CFTC designated IMX Health as a contract market.

I am delighted to see that for Phupinder Gill advised IMS Health LLC become the 17th US DCM under CFTC regulation. A 2-sided futures market on health outcomes benefits everybody and can only accelerate transparency on pricing that leads to better health outcomes as well as a liquid market. 

Meanwhile, billionaire Howard Lutnick is back. “It's deja vu one more time” as the late, great Yogi Berra memorably noted. Yogi Berra of course, was the man that we devoted an entire special edition to EI Exchange Invest 596 September 24th 2015 attributed edition with all of his magnificent quotes or at least a smattering there off used against the news stories. So “deja vu one more time” this is in the bond market and interest rates as Howard Lutnick returns to take on the US T Bond ETD monopoly and SOFR too for good measure with his latest competitive platform to the CME… having of course previously created eSpeed and ELX amongst others. 

Meanwhile, it was a very busy week for deals in the parihs, not just the Tadawul deal which headlined this show but also EquiLend has been acquired by Welsh, Carson, Anderson & Stowe. 

It began with a group of funding banks including Barclays Global Investors, Bear Stearns, Goldman Sachs, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Morgan Stanley, Northern Trust, State Street and UBS Warburg, now Equilend has been acquired by a PE firm to accelerate its growth. 

Good news from the Aquis Stock Exchange, delighted to see that CEO Founder Alasdair Haynes has been leading a series of insiders buying the stock recently. 

One other new and exciting market that comes about and has raised funding as a result of their opening deal, Bulk Exchange have raised $4.5 million to help construction companies source bulk material. 

Fascinatingly, the startup building marketplace is not just $4.5 million richer in seed funding, but it has a subscription model not per transaction, which I suppose echoes the original Aquis MTF of whose management there was a lot of stock buying activity of late. 

If you're trying to work out what you shouldn't be buying in terms of stock, at least in terms of what genres you should be in, where you should be looking to the future, you have to consider a copy of my book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. This is a way to understand how technology is affecting life and markets. It's published by DV Books and distributed by Ingram world wide. 

While you're waiting for your copy of “Victory or Death?” to arrive, check out our live stream Tuesdays 5 o'clock London, 12 o'clock New York time - that's the IPO Video live show. You can catch the back episodes on Linkedin and Youtube via “IPO-Vid”. 

This week, we had a magnificent show with the former CEO of Chi-X Australia, John Fildes, who was discussing Disruption & Growth and really give us an incredible outlook right across the world of exchanges, markets and fintech related there too. 

Our next show is going to be our 2023 Review of the week which is coming up on Tuesday. 

“Finance Book of the Week” this week has been Too Big to Fail by Andrew Ross Sorkin, that was the first definitive blow-by-blow account of the 2008 economic crisis and given Ross Sorkin's top tier Rollodex, he had remarkable access and thus insight to the people, the events and the results recounting how motivated as often but ego and greed as by fear and self-preservation, the most powerful men and women in finance and politics were deciding the fate of the world economy on the hoof.

Too Big to Fail,  that's our latest book of the week.

And don't forget if you want to know what our new book of the week is in advance and indeed enjoy have jolly good macro read as well, sign up at ExchangeInvest.com for our free Saturday weekend newsletter.

Also while you're at ExchangeInvest.com why don't you take the box and go for a free trial for one month of Exchange Invest. We would be delighted to see you and if you want to understand what's going on in the bourse business then you need Exchange Invest Daily Newsletter, the Exchange of Information. 

Product news this week, a huge achievement for the Gary Gensler’s SEC, the work he began moving the derivatives markets onto central counterparty clearing house while chairman of the CFTC under the Obama regime has now been effectively completed as chairman of the SEC that's the cash equities and bonds Securities Commission, as well as various other options products and so on related to equity. Gary Gensler has successfully managed to insure that US Treasury bond trading has moved to a central counterparty clearing house in this case, the FICC (Fixed Income Clearing House) which is a subsidiary of the DTCC that clears American equities.  

Meanwhile interesting news from the Department of Energy in the USA, they've selected a consortium to bridge early demand for clean Hydrogen. They say that's going to provide market certainty and unlock private sector investment. 

Very interesting group there in led by amongst other people, ICE and S&P Global. This looks like a fascinating glimpse of what could be an incredible market in the future, clean Hydrogen.

The CME Group meanwhile, they were very quick to launch collateral efficient measures with the DTCC to ensure that we get the best of both worlds for derivatives and the cash treasury bond participants who are looking at both products between clearing houses. 

China has relaunched a voluntary carbon credit market halted in 2017.

NASDAQ's Capital Access Platforms have launched leading indicators for IPO activity, the “NASDAQ IPO Pulse Index” that leverages a data driven approach to provide corporates and investors with an approximate six-month forecast of directional shifts on IPO activity. That of course comes in week where NASDAQ is very confident about their IPO pipeline at Davos, NYSE were very confident their IPO pipeline in Davos, and indeed also Brazil's B3 reckon they might have more than 100 IPOs lined up in the near future. 

In the US, though, the SEC is poised to adopt tougher rules for SPACS presumably to stop the irrational exuberance that broke out during the COVID period. 

Finally for this week in our product news section, the Korean regulators short selling ban is ongoing. 

Technology news, the European Union has approved rules to shake up market price data for investors. 

The consolidated tape is given Euro parliamentary backing. Then again, given the 6% versus 82% EU versus US growth marker of the past 15 years, it's frankly going to take an awful lot more than one source of data to get Europe back on track from its seemingly inevitable descent into voluble, touristy but ultimately economic obscurity. 

Then we get back to Micro Connect and of course that's top of the bulletin story. 

Charles Li founded Micro Connect extends the accessibility of his genius core lending product with the launch of the market-accepted protocol (MAP) allowing investors to value expected cash flows and risks of daily revenue obligation from the incredibly data rich Micro Connect enterprise.

China is in financial transition terms way, way, way ahead of the rest of the world for (day to day purchases, pretty much everything buying chewing gum / groceries, that kind of thing) all happens on card and thus Micro Connect beautifully exploits that to oil the wheels of commerce and enable a remarkable product for investors in debt terms. 

I think this is genuinely a case that MAP is a Magna Carta moment for investors. 

The London Stock Exchange has opened a technology center of excellence to ramp up hiring. 

The LSEG is planning to another 1000 codey kind of folks to the global payroll. Rather than make a statement, perhaps I can paraphrase this as a question for your discussion at the watercooler today: How come the LSEG has umpteen technology “centers of excellence” but its own markets technology seems rather shonky in the cold light of market operations?”

Tradeweb meanwhile has completed the acquisition of technology provider R8fin.

A swift closing to the deal that was announced at the end of November. I do hope it works out for all parties as Tradeweb integrates the algo trading firm focused on bond and rates trading. 

And finally, in the fascinating realm of markets technology this week, Brazil's B3 clearing house, they have begun operation of a cloud-based foreign exchange clearing processes. 

Regulation news this week was an SEC backlash against the agency and Gary Gensler over the ongoing fester, which is the aftermath of their Twitter account being hacked last week, and at the same time, Gary Gensler is concerned about the impact of artificial intelligence. 

In career news this week, the OCC (Options Clearing Corporation) has announced an update to its board of directors. Main one, executive chairman Craig Donohue has transformed himself into a non-executive chairman perhaps the most interesting additions to the board, OCC CEO Andrej Bolkovic and NASDAQ Executive Roland Chai is joining the board. Roland incidentally replaces NASDAQ veteran former head of the Philadelphia Stock Exchange Sandy Frucher, who was re-elected as recently as last May and has been on the board of OCC since 1998. 

Newcomers too to the KASE (Kazakhstan Stock Exchange) management board in Almaty. 

Congratulations to Dana Muratbekovna Amanzholova, Deputy Chairman of the Management Board as she now is and Yeldos Maratovich Kuanyshbekov become Managing Director of IT who has been managing director of IT actually for some time and has been elevated to the Management board of KASE in Almaty.

Michael Spencer's family office, they have just hired a former leading executive of ICAP (Michael Spencer's old public company) Seth Johnson, who will run said private office. 

Congratulations to IPO alumnus, Alexander J. Matturri, Jr. Alex has joined the SOFR Academy board, while Dr. Navraj Adhikar has become the acting chairman of SEBON (the Securities Exchange Board of Nepal), and he's actually one of 8 candidates in the running to become the next chairman of Nepal's regulatory body. Amongst the other candidates running are Chandra Singh Saud, who's a former CEO of the Nepal Stock Exchange (NEPSE). 

From the heights of Nepal to the depths of the fall of remarkable computing giant, at least in public company terms. 

Once upon a time, I can recall when buying a laptop was synonymous with Apple / Dell & Toshiba. In a remarkable sign of how the once almighty Japanese tech giant has fallen, after 150 years of operations and 74 as a listed company on TSE (Tokyo Stock Exchange), Toshiba has been delisted in the wake of what has proven a catastrophic debt-laden leveraged buyout…

…and on that mysterious and magnificent note ladies and gentlemen, thank you for listening to this EI Weekly Podcast #229. Join us daily via ExchangeInvest.com or if you have a new exchange you would like built do please get in touch. 

My name is Patrick L Young and I wish you a great week in life and markets.


Saudi Tadawul Group Acquires A Strategic Stake In Dubai Mercantile Exchange Creating Gulf Mercantile Exchange

Saudi Tadawul Group Acquires A Strategic Stake In Dubai Mercantile Exchange Creating Gulf Mercantile Exchange

NYSE Pulls Plan For Environmentally Sustainable Asset Class

CFTC Designates IMX Health, LLC As A Contract Market

Billionaire Howard Lutnick Is Taking On Exchange Giant CME

EquiLend To Be Acquired By Welsh, Carson, Anderson & Stowe

Positive Signs As Multiple Insiders Buy Aquis Exchange Stock
Yahoo Finance

Bulk Exchange Raises $4.5m To Help Construction Companies Source Bulk Materials

Bond Market: SEC Moves Treasuries Trading To Clearinghouse

DOE Selects Consortium To Bridge Early Demand For Clean Hydrogen, Providing Market Certainty And Unlocking Private Sector Investment
(US) Department of Energy

ICE In Consortium Developing Clean Hydrogen Market
Markets Media

CME Group And DTCC Launch Enhanced Treasury Cross-Margining Arrangement, Enabling Capital Efficiencies For Clearing Members

China Relaunches Voluntary Carbon Credits Halted In 2017 (1)
Bloomberg Law News

Nasdaq Capital Access Platforms Launches Leading Indicator For IPO Activity - The “Nasdaq IPO Pulse Index” Leverages A Data-Driven Approach To Provide Corporates And Investors With An Approximate Six-Month Forecast Of Directional Shifts In IPO Activity

SEC Poised To Adopt Tougher Rules For SPACs
Thomson Reuters

Korea's Short Selling Ban To Continue
The Korea Times

EU Approves New Rules To Shake Up Market Price Data For Investors

Micro Connect Unveils New Market Standard For Financing China's Micro And Small Businesses
South China Morning Post

London Stock Exchange Group Opens Tech CoE, To Ramp Up Hiring
The Hindu

Tradeweb Completes Acquisition Of Technology Provider R8fin

Brazil's B3 Begins Operation Of Cloud-Based Foreign Exchange Clearing House 
The Trade news

SEC Chair Warns Centralized AI Could Lead To 'Fragile' Financial System
The Hill

OCC Announces Updates To Board Of Directors - Executive Chairman Craig Donohue Transitions To Chairman - OCC CEO Andrej Bolkovic And Nasdaq Executive Roland Chai Join Board

Changes In The Composition Of KASE's Management Board

Michael Spencer's Family Offices Names New CEO After 260% Gain On Insurance Bet

Former CEO Of S&P Dow Jones Indices Alexander J. Matturri, Jr. Joins SOFR Academy
Yahoo Finance

Dr Navraj Adhikari Is Acting Chairman Of SEBON
MyRepublic - Nagarik Network