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236 Exchange Invest Weekly Podcast March 16th, 2024

This week in the parish of bourses and market structure: Does ASX+ASIC=Awful? Gazza G Shoehorns Climate Regulation Into the US Securities Regulation Sphere, CBOE Says No Deal, DB1 Has A New CEO, And T Bond CCP Competition Is Coming To The USA


This week in the parish of bourses and market structure:

Does ASX+ASIC=Awful?

Gazza G Shoehorns Climate Regulation Into the US Securities Regulation Sphere

CBOE Says No Deal

DB1 Has A New CEO 

And T Bond CCP Competition Is Coming To The USA…

My name is Patrick L Young 

Welcome to the Bourse Business Weekly Digest Episode 236

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  

I was delighted this week to contribute an article to the Vermiculus newsletter on that fascinating topic, the move from T+2 to T+1 clearing as already undertaken by Russia and India while coming May 28th to Canada, Mexico and the world's market leader by far the United States of America. 

As you will recall settlement times have long fascinated me and while I still ponder real-time settlement, the move to settling in a day carries with it huge issues for conventional asset markets. 

If you're interested in some of the issues and how they may be resolved, check out the latest edition of the Vermiculus newsletter. You can find the link via our show notes at ExchangeInvest.com or go type in Vermiculus.se.

In Bitcarnage this week: 

In the stuff we truly cannot make up, even when it comes to the whacky world of crypto, the news Binance made crypto perfume in an attempt to woo women is surely the ultimate distribution from the brotopia controlled digital asset markets?

Also, the bros are excited as they reckon they could do the full SBF and buy the government: crypto dollars help lift U.S politicians to victory and congressional primaries went the CoinDesk headline. 

Then there is COIN which is again upset that the US SEC has not written laws especially for them - even where they have in the past been somewhat challenged to adhere to even existing stuff like AML / KYC laws. 

If you enjoy 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 update on happenings in the world of crypto and digital assets, you can find Bitcarnage as a standalone on Substack

Over in the world of traditional legacy exchanges, the Australian Stock Exchange has paid a 1,050,000 australian dollar penalty for order information transparency failure. 

Down under, the Australian regulator ASIC finally fined ASX albeit it was a minor slap on the wrist compared to what it might have been, I'll spare you the “unprecedented yadda yadda” from the meeja. This looks a lot more like yet another GUBU regulatory process from ASIC. ASX had 8417 points of failure! So they got a New York minute on the naughty boy step. I am minded to wonder: Whither This Farce?

The process rendered here looks more like how game of Cluedo (Clue) if you're in America may look if the Biden administration or the EU/EC gets a chance to rewrite the rules aka “On finding Colonel Mustard brandishing the steel pipe over the comatose body of Dr. Black / Mr. Bobby / “Boden ‘Bloody’ Black Jr. again, depending on the version you're playing. retired military officer Mustard was promptly arrested for improper disposal of metals with a potential to endanger the environment.”

What can we conclude? ASX, an organization already incapable of upgrading its systems has been judged incoherent in running the stuff it already has installed. With ASIC believing it has discerned rampant breaches in ASX systems, the net fine is under $85 US per infringement - significantly less than half the lowest OZ traffic fine for exceeding the speed limit. Plus you get 2 penalty points with the speeding fine whereas here once again ASX is allowed to walk shamelessly away from what is further evidence of a worryingly ill-suited for purpose organization. Nobody resigns, nobody really much cares…a typical “am I bovvered” release from the politburo suggests ASIC is under ASX suzerainty not the other way around. 

True, if we think ASIC can get a new pair of dentures then there may be reasons to believe a vaguely toothy punishment is looming with the statement: “This outcome is separate to ASIC’s investigation in relation to the ASX CHESS Replacement Program. That investigation is ongoing. “Nevertheless, based on these first proceedings, we cannot be optimistic. However, we can confirm ASIC as a “light touch” regulator. When ASX sins, the penitence as a “light touch” to the knuckles, nothing more. 

Meanwhile, the London Stock Exchange Group's London Stock Exchange continues to attract negative headlines as an air of crisis pervades the markets of Paternoster Square.

Stones rarely defy gravity. The LSEG share price may remain relatively elevated as folks try to re-rate their second hand data business as a key value driver but even with the success of moving Reuters financial from moribund to merely sclerotic, there's a limit to upside. Having your core name brand of the group falling apart in front of you is not a means to engender shareholder confidence. 

The irony of Blackstone et al continuing to settle down as Reuters noted offloading $2.4 billion worth of shares via the OTC market away from the exchange itself - is hardly the best advertisement for the embattled market. 

Meanwhile, across the Irish Sea, the Irish Stock Exchange is provoking concerns including an Irish Times headline Can The Irish Stock Exchange Be Saved? Ultimately, government has been hands off for far too long…

When Fred Tomczyk said this week CBOE of which he has seen, oh was not about to be taken over, it was a relief to hear as Exchange Invest explained / when Ed Tilly left last year that buyers would not be emerging despite a media / analyst narrative of M&A looming. 

This week we even produced a “cheat sheet” in Exchange Invest to explain just why a bidder would not emerge for CBOE - it was free to all Exchange Invest subscribers, sign up for a free trial today and we'll send you the ‘sheet’ with our compliments.

Meanwhile, TP ICAP has essentially split itself into two units they might be termed ‘forward’ and ‘backwards’. In absence of ‘backwards’ finding a way forward amidst the thicket of brokers, we’re somewhat back where we were by a year ago February 10th 2023 where Exchange Invest 2582 discussed TP ICAP terminating talks to sell their data unit after making nice to PE funds who slide rules said no to whatever valuations were being tossed about including a heady 1.5 billion valuation for Parameta alone.

In deals this week, one interesting deal, BSE (Bombay Stock Exchange Group) are planning a buyout of the S&P Dow Jones indexes joint venture stake.

BSE following the route taken when the FT Group foolishly held on to their ‘news assets’ and sold half of FTSE to the LSEG in what was Xavier Rolet’s inspired first deal all the way back on December 12th 2011. 

Speaking of inspired deals, won't take that much money, you could have a copy of “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. It's my book helping you to understand how technology is affecting life and markets. 

You can find your copy in bookstores anywhere. “Victory or Death?”is published by DV Books and it's distributed by Ingram worldwide.

While you're waiting for your copy of “Victory or Death?” to arrived, check out our live stream Tuesdays at 5 o'clock London time that should be. In the course of the next few weeks. It's going to be a 1 o'clock New York time due to shuffling of time zones or at least shuffling in America and non shuffling is in Europe. 

The IPO Video live show - you can catch the back episodes on Linkedin and Youtube via “IPO-Vid”.

Our next show number episode 138 , we're gonna have a fabulous guest, University of Reykjavik Professor Gunnar Stefansson, he's going to be discussing Smileycoin - The Happy Face Of Crypto

Putting on our happy face for investment this week's, our “Book of the Week” which you can actually get a heads up on if you've subscribed for free to the EI Weekend Edition, you just go to ExchangeInvest.com and tick the appropriate box. 

While you're there, why don't you think about actually getting a subscription to Exchange Invest, the daily bulletin of the bourse business, that's only $375 per annum these days. A snip for all the information that's included. You can also sign up to a free 30 day trial of Exchange Invest at via the ExchangeInvest.com website. 

And of course don't forget this week, we're giving away that free cheat sheet all about why CBOE won't be acquired. 

Anyway, this week's “Book of the Week” was written by Burton G. Malkiel. Its best selling, authoritative, and gimmick-free guide to investing, A Random Walk Down Wall Street: The Time-Tested Strategy for Successful Investing. One of those books that you must have on your bookshelves at home if you're in any way a serious investor. 

Our next “Book of the Week” will of course be unveiled, as I mentioned a moment ago, on Saturday in the Exchange Invest Weekend Edition. If you want to stay ahead of what's happening, subscribe to that free of charge. 

Over in regulation news, the SEC have passed a climate or rule that leaves no one happy, noted Investment News as the era of smug technocracy by the ‘educated stupid’ continues apace, heedlessly and needlessly expanding the original, very neat Securities Act from the 1930s with a ludicrous agency bracket creep. Whatever the debate about climate change, this is not a fundamental securities regulation issue, but a good example of the horrors of big state. Nobody is happy, everybody is encumbered and in the end, rules such as this merely hamper markets, which mean less money to innovate and thus cure climate (or other) issues, which let's face it, will not be cured by government intervention (…unless you think living in mud huts eating raw food is a solution).

In career paths this week, we have a new CEO for Deutsche Börse. Dr. Stephan Leithner was appointed as the company's new CEO, is going to take office on the 1st of October, he's going to spend a quarter co-CEO and together with the outgoing Dr. Theodor Weimer.

So it's nearly farewell to Theodor Weimer who managed his international business on the Duffy model - AKA broadly absent from the world stage beyond his home town. The “El Tel” of the Taunus if you will - rarely spotted beyond the greater confines of greater Frankfurt.

in replacing Theodor Weimer, DB1 got it half right. They chose an insider, just me thinks the wrong one. That said I really know nothing about Stephan Leithner, who has a very low profile having headed Clearstream. It's a return to form for DB1 picking another ex-McKinsey partner. Weimer was a huge contrast…he came via Bain. The question is will Leithner emulate Werner Seifert and admit to having bought the same first records as his counterparts in market structure?

Anyway, so near but yet so far, it looks like another victory for management by PowerPoint. The proven deal-doer who transformed a relative backwater amongst the DB group into a serious business, Peter Reitz is passed over…what a shame for both DB1 and the parish as a whole. Of course Leithner is not the first back office manager to lead DB1, Carsten Kengeter hard that honour. 

For decades DB1/EUREX had strong visible candidates and management. Like them or loathe them, they made an impact. Their high-profile heavy hitters included Jorg Franke, Werner Seifert himself, Rudi Ferscha, Andreas Preuss, the frankly awesome brooding presence of the excellent Jurg Spillmann, and the late, great Otto Naegeli… Gosh, even the head of DB1 comms was an ex-British army paratrooper officer with remarkable color to his Presence. Nowadays, it all feels rather monochrome, at best, without the depth of field from the DB1 photo award entrants. Some might even go so far as to say Eschborn just isn't at the center of the financial universe. 

Over in Hong Kong, Carlson Tong is going to be the new chairman of Hong Kong Exchanges Group. He was previously chairman of KPMG China, an interesting choice again, big ties to the mainland ought to help Hong Kong exchanges building on the Laura Cha factor. 

Over at SIX Swiss Exchange, David Brupbacher is becoming Head IT and a Member of the SIX Group Executive Board as of July 1st he will be replacing Christoph Landis who will retire in the second half of the year. 

And then we look over to Thailand ladies and gentlemen, where the grim face of corruption was risibly visible recently, when somebody did a little investigating into the accounts of 4 Thai civil servants, who had somehow squirreled away an eye-popping $57 million US dollars in their respective bank accounts.

The average civil servant in Thailand makes around $11,500 per annum. A government official memorably noted: “Their listed assets - including their bank deposits - did not match the government incomes.”

…And on that mysterious and magnificent note, thank you for listening to this EI Weekly Podcast Episode 236. 

Join us daily via ExchangeInvest.com or if you have a n ew exchange project you would like build get in touch. 

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


ASX Pays $1,050,000 Penalty For Order Information Transparency Failure

Exodus: Eight Troubling Omens For The London Stock Exchange
City A.M.

CEO Of Options Powerhouse Cboe Swats Down Talk Of A Takeover

BSE Plans Buyout Of S&P Dow Jones Indices' Stake In Joint Venture
Business Standard

SEC have Passed a Climate Rule That Leaves No One Happy
Investment News

Dr. Stephan Leithner Becomes CEO Of Deutsche Börse AG

Hong Kong To Name Ex-KPMG China Head To Chair Stock Exchange
Bloomberg Law News

Change In The SIX Executive Board