Apr 11, 2024 11 min read Exchange Invest Weekly Podcast

240 Exchange Invest Weekly Podcast April 13th, 2024

FEX Global Offer Puts Australia In Play, NASDAQ Seeks A New Formula For The Cloud, There's Talk Of Approval For An NSE IPO, Gary Gensler’s Green Zeal Is Postponed, LSE Investors Launch An ODD Pay Revolt, & US T+1 Is Looming In <30 Working Days

Transcript:

This week in the parish of bourses and market structure:

FEX Global Offer Puts Australia In Play,

NASDAQ Seeks A New Formula For The Cloud,

There's Talk Of Approval For An NSE IPO,

Gary Gensler’s Green Zeal Is Postponed,

LSE Investors Launch An ODD Pay Revolt,

& US T+1 Is Looming In <30 Working Days

My name is Patrick L Young

Welcome to the Bourse Business Weekly Digest

It's The Exchange Invest Weekly Podcast Episode 240

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

Over in Bitcarnage, we discussed this week “An Absence Of Trust”.

The SEC Enforcement Director Gurbir S. Grewal took the opportunity of a conference appearance to rather calmly and lucidly outline a brief history of crypto trying to avoid regulation which has been met with at the minimum a modicum of disdain from the crypto media such as Cointelegraph amongst others. Yet the reality is the crypto industry has behaved like a wayward puppy being placed under leash for the first time - broadly doing anything to avoid being brought to heel. That behavior is still too prevalent in the industry and leads to the Howey test denouements which are looming, such as The Wall Street Journal reports SEC enforcement chief touts progress in Coinbase case. Markets don't survive without trust and while a lot of millennial bubble excitement is taking place, the case that crypto winter is all done and dusted may yet appear precarious for many…

Mr. Grewal’s speech is well worth reading.

If you enjoyed this excerpt you may be interested to know you can read Bitcarnage everyday in Exchange Invest.

Alternatively, if you want to follow Bitcarnage, the daily update and happenings in the world of crypto and digital assets. You can find it as a Substack standalone, subscribe today to Bitcarnage.

Of course, if you'd like the whole story, subscribe to Exchange Invest. You can find all the details of that at ExchangeInvest.com.

Over in the mainstream world of exchanges, we're under 30 working days to get to US T+1 equity settlement.

Paul Conn, who was a great guest on IPO-Vid recently has a great piece on LinkedIn about settlement and the move to T+1. I would add a couple of points to his thinking, one of which is the big difference between T+2 moves a decade or more ago…AKA even a decade ago, the US dominance of all global equity markets was not clear. Now in the world of stocks is the US and the rest, that means America going T+1 immediately leaves everybody else lagging (in every sense) with the likes of the UK particularly exposed…and I suppose the EU too, but they were already adrift from global capital due to the total failure of a CMU plan to emerge.

The T+1 news this week was that CLS are stuck and unable to settle cashmoney faster, which is at best curious where others have a mega real time risk management, forex seems to be stuck in a dark age. That said the CLS window being fixed probably leads to other solutions which must be hugely exciting for the folks, at the likes of US ATS Blue Ocean Technology, which was also much discussed this week on IPO-Vid with Tom Caldwell.

By the way, there's talk of a coordinated UK/Swiss/EU approach emerging to do T+1 and what we can only describe nowadays as the “old” world, that's going to be T+1 by 2027. So T+ well over a thoudand days from here, at least presuming there's still an equity market left in Europe by then, well, I suppose it'll be progress.

Speaking of progress or regress, there's a huge debate at the London Stock Exchange Group or at least around the London Stock Exchange Group.

Catastrophism is big in London right now on the LSEG is doing nothing to defend itself - which can be presumed to be an indication that LSEG only cares about their “G” right now, not the LSE bit that originally propelled them to this point pre-refinitiv. Until folks start thinking outside the box, progress will be limited. Meanwhile, as the listings depart, investors move “risk off” on all ODD’s 13.2 million pound CEO remuneration package, wary over the doubling plan. FTSE100 has made tenuous new highs of late but LSEG’s stock remains a becalm hype machine.

Where the UK is lackadaisical, Hong Kong comes out swinging, which is just what we expect of a proper jurisdiction, which has learned to have a little hustle to sell its excellence - London needs to take note particularly LSEG (and apologies to the likes of Aquis, CBOE and ICE amongst the other exchanges who get the notion from London of selling and pushing for business!).

Moving on to new markets, India is proposing a national iron ore exchange to tackle price anomalies. That's very interesting as they're looking to price regionally and avoid what is perceived as a more volatile global market…

Second of all in new markets, the big news of the week, the Ethiopian Stock Exchange has been funded.

Ultimately the bizarre talk of the Ethiopian Stock Exchange being born and near unicorn - with a $750 million valuations - appears to fizzled out $26.6 million have been raised with the Nigerian NGX Group contributing a lot of know-how and purchasing a 5% stake with an option to increase the 10%. Ethiopia SX is thus being born worth more than existing listed African exchanges in Dar Es Salaam and Nairobi.

In deals, it was a busy week for deals in the parish all the deals 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.

There's a mega opportunity incoming, it's looming right now ladies and gentlemen, the chance to compete head to head with ASX and derivatives as FEX global is being quietly touted as a sale prospect by JPMorgan,

FEX represents a huge potential prospect for anybody who likes the notion of a full Australian derivative exchange license, which is already operational with all manner of useful add-ons such as CFTC FBOT status and more. CCP relations are currently through CME. There are contracts in existence across a range of markets already trading. The opportunities for development include the exciting prospect of going head to head against the ASX ETD monopoly. Beyond that consider Australia's secure position within ASEAN and the broader Southeast Asian region: this is a stunning opportunity to acquire a turnkey marketplace, which could easily expand beyond Australia too.

Who might bid? It's a vast field of potential runners and riders. Rumors in the Sydney CBD even suggested ASX might mind a bid. But surely the ACCC Australian antitrust - would have an issue with that?

We outlined all the likely runners and riders a week ago in Exchange Invest when we broke this scoop ahead of all global media. Can you afford not to subscribe to the bulletin of the bourse business?

Join us today at ExchangeInvest.com fro only $375 per user year.

In another surprising development this week, a shocking development and in fact apparently moves are afoot at last in India for Sebi to come somewhat closer to approving an NSE IPO than we've ever seen after barely 20 years wait since it was first approved.

If you're trying to understand the knotty problems of just why the SEBI has not been approving this IPO amongst other things in the developments of blockchain, cryptocurrency and the FinTech world, and particularly exchanges. You might like to read my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World discusses that binary world where your career will sustain or collapse in the next stage of the digital world hence the title “Victory or Death?”. It's published by DV Books and distributed by Ingram worldwide.

While you're waiting for your copy of “Victory or Death?” to arrive. Check out our live stream Tuesdays at 5 o'clock London time, midday New York time it's the IPO Video Live Show.

This week we had an epic show, you can catch the back episodes on Linkedin and Youtube via “IPO-Vid” with Tom Caldwell who was our guest 138 discussing Exchanging Investments.

Coming this week we'll be discussing The Winds of Change and actually, rather topically looking at the building of the Ethiopian Commodity Exchange, which of course was the forerunner to the Ethiopian Stock Exchange, which has just been recently funded, as we mentioned earlier.

In our ”Finance Book of the Week”, and don't forget, if you want to read our Finance Book of the Week, get the heads up earlier, then you can find out what it is by subscribing to our free EI Weekend newsletter. Absolutely free. It's a more macro read than the purely hardcore Exchange Invest of Monday through Fridays.

Anyway, our Book of the Week this week was written by our IPO VIP guests # 125. The multi award winning academic, Johan Norberg.

“The Capitalist Manifesto: Why the Global Free Market Will Save the World” is a beautiful case for capitalism, ladies and gentlemen, and I encourage you all to go buy a copy and read all about the vital role played by the free market in today's uncertain world. In product news this week, CBOE Global is seeking SEC approval to list ETF share class structures. That's a fascinating move as the mutual funds business is finally 25 years after scoffing at Capital Market Revolution! It would appear they are finally realizing the game is crumbling around them and want to offer their funds as ETFs…which will surely subsume their mutual funds into the exchange world over time, probably a very short period of time too. This is a great move and I hope it catches on the world over

The point in “Capital Market Revolution! I made in 1999, that was my original book about FinTech was at a 500 basis points bid / ask spread on a mutual fund with all manner of arcane rules relating to the advantage of the fund - not the client - in terms of acquisition or redemption was not going to survive in a world of exchange-listed index trackers, ETFs as they became more popularly known. The mutual fund industry was appalled and strenuously sought to push back on my message…until the 500 basis points collapse to a - still excessive, but nonetheless much lower - 30 basis points within months. In technology news of this week, the beancounters, those enemies of process while double entry bookkeeping their way towards efficiency, they have it seems been struggling to believe that with huge sunk costs to depreciate there's any benefit on the balance sheet to a cloud move ex-prem. Thus a fascinating Celent paper for NASDAQ, which introduces the intangible not sufficiently perused by the often risk adverse exchange business “opportunity costs”. You can download the paper from the NASDAQ website, and it really is a fascinating read altogether.

Meanwhile, the European Central Bank, they've selected Tradeweb, their electronic trade platforms for a 4 year period.

And there was a great article in addition to the recent Vermiculus article and indeed the Paul Conn article I was discussing at the top of this newsletter, a T+1 settled argument by a GARP Jeff Kutler and one of his excellent discussions all about the hard deadline approaching with some gaps in preparedness.

Over in regulation IOSCO are making some proposals for closer scrutiny of stock exchanges. As ever, the devil does not correlate with details in all cases and this is the nub of whether this is actually merely enshrining national protectionism for regulators or truly looking to strengthen the regulatory framework for market infrastructures, time will tell.

Elsewhere in the USA, the huge failure of the Gensler SEC chairmanship has been writ large - vast overstretch on the original rather neat, focused agency. No wonder GG has brought upon himself a vast welter of lawsuits due to his doctrinaire, stubborn actions which we knew were a trait he could be prone to when he ran the SEC. Thus, the SEC have had to halt their controversial climate rules after being pelted, as Fortune Magazine described it, by 10 legal challenges. And our final exchange news item of the week, progress on the NSEL case, the National Spot Exchange Limited was, of course an incredible $387 million fraud, which took place back in the early days of Exchange Invest being launched a decade ago. We're delighted to report that over 8000 investors out of the 13,000, who've lost money have received payment so far. That's only taken 11 years from the crisis itself. And there's talk in India that they're going to quickly resolve the rest of the outstanding issues albeit while 2/3 of investors have been recompensed, barely a third of the outstanding amounts have been covered. That means that only $146.4 million have been paid out of the $387 million defrauded. Hopefully things will get resolved quickly but after 11 years of foot dragging, I'm not overly optimistic.

And finally in BigWorld this week, let's talk about an interesting little factoid in relation to net total liquid wealth.

In the USA, the total liquid wealth of the nation is 67 trillion. China despite having more than four times the population of the USA has a net total liquid wealth of $27 trillion. So the US still has a $40 trillion investment advantage.

…And on that mysterious and magnificent note, thank you for listening to this Exchange Invest Weekly Podcast #240.

Join us daily via ExchangeInvest.com or if you have an exchange or marketplace you'd like built get in touch!

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

LINKS:

Update on the potential change to CLSSettlement timelines following the move to T+1 securities settlement
CLS Group

https://www.linkedin.com/pulse/t1-settlement-ready-set-go-paul-conn-1x1pe/?trackingId=XFotPi17R0yXXw2DT%2BOhwg%3D%3D
Paul Conn - LinkedIn

London Stock Exchange Could Be Stripped Of Smaller Firms By 2028, Warns Peel Hunt
City A.M.

HKEX Eyes Saudi, Indonesian Companies To Win More IPOs From Emerging Markets
South China Morning Post

India Proposes National Iron Ore Exchange To Tackle Price Anomalies, Document Shows
Reuters

Ethiopian Stock Exchange Gets Bids For Twice The Shares On Offer
Bloomberg

Cboe Global Markets Seeks SEC Approval To List ETF Share Class Structure
Yahoo Finance

Celent Report On FMI Approach To Cloud Adoption
Nasdaq