235 Exchange Invest Weekly Podcast March 9th, 2024
Transcript:
This week in the parish of bourses and market structure:
Is T Bond Clearing Competition Looming?
Amidst Multiple Worries & Thoughts From European Union,
FT Criticizes Its Core Readers,
NASDAQ Outlines Its Priorities,
As Hong Kong Exchanges Profits Soar!
My name is Patrick L Young
Welcome to the Bourse Business Weekly Digest Episode 235
Good day, ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the world in market structure this past week. 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
We begin over in Bitcarnage:
Just when you think Binance might have staunch the bad news stories, the Government of Nigeria has decided the secretive exchange still reeling from its criminal convictions of last year is culpable for a run on the Nigerian Naira.
In a retro move which reminds us of the criminality which dogged Binance previously, Nigeria detained two Binance executives in a crypto clampdown.
Way back when there were people in the world (“people” being a generous turn of phrase) who believed Binance was not a criminal organization. A few of us constantly demurred, and were proven correct.
Anyway, things are heating up again in the Binance universe, just as the BTC itself heats up in a remarkable bull market bubble:
The Nigerian government is simply furious, accusing Binance of fueling the reason collapse in the Naira. To that end, they arrested a couple of executives last week and fines of $10 billion US have been mooted.
While Binance have removed the Naira from their crypto P2P trading platform, it appears that CEO Richard Teng is reluctant to appear before a Parliamentary committee in Abuja, despite being summoned by the Chairman of the House of Representatives Committee on Financial Crimes, Ginger Onwusibe.
Nigeria reckons Binance has dealt with 10 million Nigerian clients and handled some $26 billion in Naira transactions, provoking the recent currency collapse. Claims of money laundering and worse are being made from the Nigerian Parliament. Reports say Binance is not licensed in Nigeria.
While the $10 billion fine may yet prove a chimera of sorts, in the USA, Binance’s worries are far from over. The latest is a suit where October 7th attack survivors sue Binance. We've previously mentioned how lax money laundering standards could sink crypto markets and Bnance once again in the eye of one such storm.
Elsewhere, Binance plays a leading role in a new academic paper Crypto Flows Finance Slavery? The Economics Of Pig Butchering - again, not a good look.
If you enjoyed this excerpt you may be interested to know you can read 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 then you can find Bitcarnage as a standalone on Substack.
NASDAQ has outlined their strategy to deliver the next phase of resilient and scalable growth, that was outlined at the NASDAQ Investor Day where Adena Friedman and team sensibly reiterated the value which - slightly perplexingly - investors don't seem to have quite geolocated yet.
Executing 2024 Strategic Priorities, there are three major issues.
First, execute Adenza integration: “The company expects to action approximately 70% of the targeted $80 million in net expense synergies ahead of plan, by the end of 2024 with a portion of full realization in 2025.”
The second is leveraging technology infrastructure to drive innovation: NASDAQ has well, from all the best possible perspectives, let us say that as of right now when it comes to marketplace technology, NASDAQ has its head in the clouds. That positioning the clouds could deliver as much as a hundred million in ancillary value, that's part of tier three unlocking the value of the divisional structure to drive incremental revenue.
Over in the UK, the good news is the LSEG has championing higher executive pay in the often jealous UK with a febrile resentment of executive pay, which stifles entrepreneurs and simply puts growth companies off listing us who needs to IPO into a minefield have tall poppy syndrome?
Albeit that accurate demand for higher management remuneration also happens to coalesce with the desire of the Group CEO to get higher remuneration.
Now that part is complicated.
While Out of His Depth Dave, the CEO of the LSEG is keen to say the London Stock market is not for sale, it doesn't stop the concerns that LSEG simply cannot manage their portfolio of diverse interests.
In essence, the old Reuters financial business has done a Stockholm syndrome repo to control LSEG’s ability to execute, and “ODD” simply lacks the management ability to see behind or beyond his spreadsheets to manage a group holistically.
Take a look at ICE, they have a mortgage business, they have the world's most famous stock exchange, which involves curating a historic building, they have umpteen contiguous exchanges, clearing and related businesses plus a considerable data franchise. How many people say “ICE have a problem balancing their priorities?” (Here's a handy hint, on the binary scale, it's the one which takes longer to draw…)
Likewise, does anyone say Hong Kong Exchanges is lost and trying to balance its opportunities between core stock exchange, ETDs (bring on that renminbi yield curve), rather dizzying number of Connect interfaces to the mainland, a full derivatives clearing suite and bond / stock clearing?
Or what about NASDAQ? Look, you get the idea, don't you ladies and gentlemen,? “ODD”- a highly apt moniker for the head honcho at an LSEG which is bereft of focus while afflicted with data Tourette's, struggling for management and has lost the core modus operandi of a capitalist company…just like Reuters financial did sometime in the distant past, even before PLY worked in the City of London.
Then we get to continental Europe, whether the FT is being duplicitous or not in championing EU free markets, the full editorial board of the Financial Times (whoever they are) have pointed out to their core subscriber base, AKA the European Union, and indeed the entire Brussels ecosystem that oversees a capital market failure.
With their preaching to that base, we couldn't agree more. While the remedies are deeply flawed (and in the wrong priority when right) it's a joy to see the “Brussels Bugle” finally seeking to align with Exchange Invest on the side of commerce, trade, entrepreneurship and investment - AKA the prosperity building bandwagon!
I suppose we could call it progress albeit of a sclerotic European nature. The Brussels Bugle is trying to explain to its home readership market (the Eurocrats in the long tail of Europhiles…) that actually the EU sucks in capital market terms.
There I said it. The FT can’t and thus its proposals are back to front and flawed. The problem is not unification of capital markets. But the main point is one buried in the FT’s various analyses: the EU is anti-business Soviet - a corporate socialist nightmare and rightly perceived as such. There's a lot of balderdash spoken about entrepreneurship but no true initiative is given to encourage it. Investors are cosseted and protected and given the sharp intake of breath meets “tsk tsk tsk” sound from a backing choir to the front man's “that's risky” refrain to almost everything.
It's good the Bugle is trying to gently move the dial away from pro-decline disaster endorser but it's also a sign it may be too late for what is a lovely tourist haven. What's the product you can sell at a premium in Europe? Cruises…Head around the Caribbean on the Ritz-Carlton's exclusive yacht seeking winter sun and it's 30% cheaper than going around Europe in summer… Tourism at a premium but perhaps only on the high seas as inland it's a bit of a festering crime mess too.
Anyway, the progress of a sort that even a crusty reactionary bunch like the FT’s editorial board is firmly moving to seek EU change. I don't envy them and their solutions here are palpably flawed in places but the realpolitic is it's probably too little too late as the world coalesces around North America, Asia, the upper bit of Africa / promarket Middle East and the touristy bit known as Europe, but watch to the pickpockets aren't worse around there.
On a more optimistic note, albeit far from festering Europe, the NSE (National Stock Exchange of India) have added one crore investors in just 10 months, that is 10 million people. The overall number of investor accounts at the National Stock Exchange of India, which don't forget has a spirited competitor in the BSE, the former Bombay Stock Exchange. The National Stock Exchange of India alone has now got 90 million investor accounts.
It was a busy week for results in the parish, all the details were in Exchange Invest daily, the newsletter no person can afford to be without in capital markets and market structure. For the sake of this podcast let's look at some edited highlights.
London Stock Exchange Group, in results, well what can I say LSEG has turned Refinitiv growth from moribund to anaemic…Hence the overall multiple of the company is a long way south of the companies making hay in original data as opposed to just reselling the secondhand stuff.
However, in results the really great growth story of the week is with Hong Kong:
#despite…well just about everything. Nicolas Aguzin bows out on a high note with the group's second highest profits ever, and handed over to Bonnie Chan with the doomsayers reckoning it's game over and PLY suggesting, and I do believe this, thoroughly and firmly, I reckon a new golden age beckons for the SAR’S key marketplace.
Against a background of post-COVID visits to Hong Kong reaching 70% of the pre pandemic levels and with the mainland having a challenging economic time, the sheer robustness of HKEX shines through here. Yes, Q4 was volatile (er #coyoteugly might be a better representation of events over the SAR frontier) but the Hong Kong monopoly exchange group shines through. However/whenever China kicks back into growth, with gusto Hong Kong Exchange of stock under Bonnie Chan will be a killer investment with all the many exciting items in the pipeline.
All the best to “Gucho!” Nicolas Aguzin hands over, showing a demonstrable example of management during tough times, which can deliver growth even when the other end of Connect has challenges. Despite COVID, despite interest rates returning to a vestige of post-QE normality, a vast Chinese recession / stroke burst bubble, Aguzin said farewell with the second largest annual profits in Hong Kong Exchanges history. A sound legacy after what was a challenging 3-year stint as CEO.
Now from March 1st, it's “Bonnie time” and, mark my words, a bonnie wee adventure it's going to be too, PLY adds channelling the Scottish side of the family tree.
If you're trying to understand what the challenges and opportunities are in the world, then look no further than having a read at my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World, that is published by DV Books, distributed by Ingram world wide and you can get it at most major great bookstores and online emporia of the financial book.
While you're waiting for your copy of “Victory or Death?” to arrive, check out our live stream Tuesdays 5 o'clock London time, midday New York time - it's the IPO video live show. Catch the back episodes on LinkedIn and YouTube IPO-Vid.
This week, due to Facebook falling over we had an extra live streamed on for the first time, not just our usual LinkedIn and YouTube staples but also Twitter (X). The recorded show has now made it on to Facebook, I do believe by the time you listen to this podcast, our guest was Rainer Zitelmann discussing his latest book UNBREAKABLE SPIRIT: Rising Above All Odds and what a fabulous show that was too, that was following on of course from his two previous appearances on the show In Defence of Capitalism: Debunking the Myths and The Wealth Elite.
In our next show, we will have on Tuesday at 6 o'clock Central European time, 5 o'clock London time, midday New York time, Olivia Cooper unraveling The Mystery of International Business – Structuring for Global Assets.
Meanwhile, our “Book of the Week” this week is from the man who was the founder and longtime CEO of Vanguard Group, John C. Bogle it's deemed an investing bible by many The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns, which reveals John Bogle’s key to getting more out of investing: using low-cost index funds, from a man who was of course, one of the earliest advocates of index trackers what we now call exchange traded funds.
If you want to know what's coming up in our “Book of the Week”, don't forget you can also subscribe to our free weekend newsletter. Yes, indeed, that's what I said it's absolutely free, drop by ExchangeInvest.com to sign up. The free weekend newsletter is available to you on Saturday mornings throughout the world and it's a gripping cornucopia of different reading including previewing the “Book of the Week”.
If you're more interested in understanding what's going on in the world of all exchanges and markets, don't forget you can also go to ExchangeInvest.com and sign up for a subscription with a 30 day free trial to Exchange Invest, the watercooler of the bourse business, the exchange of information, the publication read daily in the inboxes of everyone who's a major decision maker in the world of exchanges.
In product news this week, the Financial Times ran an article the The Radical Changes Coming To The World's Biggest Bond Market, an FT article which sparked us to ponder is the funneling of T Bond trading into CCP Clearing but a first step to a breakup of at least elements of the traditional DTCC clearing and settlement monopoly?
DTCC remains, in my humble opinion, the market behemoth closest to Marxism. Bestowed a vast monopoly power, it has oodles of talent and oodles of fat to the extent that it could consume the world's entire Wegovy supply (or whatever those drugs are called) and barely remove a single chin from a multi-flab structure. Seriously, it's right on a par (perhaps worse) than Euroclear, the infrastructure, which consistently reminds us 7 tiers of Belgian middle management never helped any structure on its way to lean or mean or indeed ‘fighting weight’.
DTCC is just too big a blob to be reliable and in CCP services, opening competition to the leviathans of capitalism like CME and ICE is a totally logical step to help make a better market and indeed one might argue, distribute risk somewhat .
There were minor glitches aplenty this week in technology, with Euronext excellent Coinbase amongst those suffering, it just the latter Coinbase keeps zeroing customer balances to zero dollars, perhaps it's a harbinger of crypto activity to come?
And that leaves us to ponder, well, a legacy issue that COVID-19 thing still hangs over our what is left of civilization post the psychosis of lockdown. Therefore, I also have to note that in other social media news this week around their anodyne video (with our very very cute pug), which we repurposed on to TikTok was promptly banned because we mentioned the COVID-19 word. It's almost as if Chinese social media platform is somewhat concerned about lab leaks or something.
Anyway, enough of IPO TikTok, which you can catch on social media elsewhere, the hangover from the COVID pandemic is still hitting business. One-time tech unicorn Hopin peaked at a valuation of $7.75 billion and his now liquidation. It's sold its events platform for cents on the post-money dollar last year (reportedly in total 50 million) to California’s RingCentral and ultimately, mispivoted towards “a community suite for creators and influencers” which simply didn't last.
@ipovid_inpatricksopinion
Founded in 2019, Hopin at its peak raised a $400 million Series C round in 2021, resulting in the $7.75 billion valuation. Then the pandemic and in particular government restrictions on liberty, came to an end. On seeing the outside world again investors blinked into the sunlight and Hopin began a precipitous demise.
…and on that mysterious and ma gnificent note, thank you for listening to this Exchange Invest Weekly Podcast # 235.
Join us daily via ExchangeInvest.com or if you have any exchange you'd like built get in touch.
My name is Patrick L Young and I wish you all a great week in life and markets.
LINKS:
Binance: Nigeria Orders Cryptocurrency Firm To Pay $10bn
BBC
Binance Drops Naira From P2P Platform Amid Government Scrutiny
CoinTelegraph
Binance's Nigerian Operations Under Threat As Gov't Summons CEO Richard Teng
CoinGeek
Nasdaq Outlines Strategy to Deliver Next Phase of Resilient and Scalable Growth
Nasdaq
The Unfulfilled Potential Of Europe's Stock Markets
FT
NSE Adds 1 Crore Investors In Just 5 Months, Overall Tally Tops 9-Crore Mark
The Economic Times
NSE Crosses 9 Crore Unique Investors Mark
Deccan Herald
London Stock Exchange Group Plc Preliminary Results For The Year Ended 31 December 2023
LSEG
LSEG’s Big Data Dividend Is Still In The Cloud
Reuters
The Radical Changes Coming To The World's Biggest Bond Market
Financial Times
Euronext Order Entry Technical Issue Persists, Will Not Be Resolved Before Close Of Day
The TRADE
Coinbase Experiences Crash As Trading Volumes Continue To Surge
City A.M.
Member discussion