13 min read

249 Exchange Invest Weekly Podcast June 15th, 2024

This week in the parish of bourses and market structure: Texas Breaks Cover, Weimer Jumps Out Of The Deutsche 'Box', And FESE Appoint Brilliant New Director General
249 Exchange Invest Weekly Podcast June 15th, 2024

Transcript:

This week in the parish of bourses and market structure:

Texas Breaks Cover, 

Weimer Jumps Out Of The Deutsche 'Box', 

And FESE Appoint Brilliant New Director General

My name is Patrick L Young 

Welcome to the Bourse Business Weekly Digest

It's The Exchange Invest Weekly Podcast Episode 249 

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


This week in Bitcarnage, we were pondering the “Strictly Mormonic?”. I say that because I read the SEC was shuttering their Salt Lake office in Utah, and immediately presumed there were statistics inferring crime in Mormon majority areas is now insufficient to justify the presence. So therefore it had become apparent it was all related, actually, to a conspicuous SEC failure:

The SEC are shuttering their office behind the failed DEBT box crypto lawsuit, namely the Salt Lake office after losing 1.8 million in that lawsuit, and thus, the smallest SEC office has met its demise. 

At the same time, there was a kind of T+1 hour revolution going on. Gosh, there was the Trumpy one seemingly storming the victory and now he opens his mouth and endangers the financial system just after a big fundraiser with lots of crypto folk. Would that be a coincidence? Donald Trump Vows to Be the 'Crypto President' — Pledges to End Biden-Gensler Crypto Policies Within One Hour. Good grief ladies and gentlemen, the excitement of it all. 

If you enjoyed this excerpt then 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 as a standalone, you can find it 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 a year ago.

This week in exchanges, the Financial Times had a ranting headline German coalition attacks 'Beer Tent'-Style speech by Deutsche Börse chief. 

First up I have to say I don't think the sort of middle-class folks who write for the Financial Times have ever been the beer-tent, let alone one where there's been a political speech happening and a heightened fiasco. But anyway, whether or not that was a heightened fiasco or heightened farago, ladies and gentlemen. Well, we were pondering something along the lines of: The End of the Weimer Republic?

It's perhaps the dullest CEO in the field (and a nonetheless fairly competitive enterprise amongst various bourses) Theodor Weimer has never made headlines. He's never done anything interesting in his 6 years as CEO and indeed, he's been so infrequently seen outside of the Taunus that has led to Paris jokes that he has to Frankfort what Terry Duffy is to Chicago - embedded and rarely seen beyond the city walls. 

However, Theodor Weimer finally said something - what's more, he actually happened to be spot on. All the more reason to view as dafty daft delulu the reaction of the German establishment who were clearly gutted the demand channeling impeccably grey thinking / words until recently has broken out of the box in frustration to point out the folly of modern Germany and the European Union. 

The question is not really what Theodor Weimer said or how said at the realpolitik is that in having a collective breakdown in the wake of TW’s remarks, the political classes have shown that they are supremely devoid of ability, character, concept and vision to see that when even this entrenched, Mr. Uber Corporate, the epitome of grey business as usual, is shouting fire, the inferno is already raging out of control.

Meanwhile, in Hong Kong, no fire raging out of control but certainly there's gonna be something happening next time there's a typhoon apparently it looks like by September. Electronic markets, AKA the Hong Kong Exchanges Groups markets will be allowed to happen no matter what the weather. I suppose we could recall that PLY metrological one liner “The trouble with weather forecasting is that it's right too often for us to ignore it and wrong too often for us to rely on it.” Soon, regardless of the weather forecasts, we’ll be confident Hong Kong Exchanges are open - hooray. 

Over in Poland, the Warsaw Stock Exchange operator want to address the revitalization of the NewConnect market this year. The Warsaw stock markets NewConnect, their small business platform, SME platform had an incredible birth but then suffered two fronts management for example, Ludwik Sobolewski, before he was felled by the curse of the pharaohs, preferred (understandably) large listings, even somewhat disdaining the smallest of NewConnect offerings…. I thought that was a little bit of a misnomer. In fact, I thought the small listings were a vast strength in terms of Wall Street main street of GPW at the time, the market memorably welcomed a $2 billion privatization IPO in the same month as a local bond was valued at sub 200,000 Polish złoty (that's under $50,000). More recently, the Polish problem has been growth in VCs across the Polish startup firmament who have aspired to punt companies straight to the USA (whether in IPOs or trade sales) it mattered not. NewConnect needs to find a new way, a third way. It's out there, I hope they can achieve it. 

Meanwhile, the worrywarts have gone on to something else now, they're having fretted over T+1 which actually worked perfectly, we’ll get onto that in just a second. 

The desire of the buy side and sell side to defray / delay, if not downright advice centralment clearing mandates remains unabashed. The latest one is Wall Street frets over the timeline for centralized treasury clearing, according to Reuters. You know, some of us, we've been around since the 1990s, even the 1980s when we were arguing the system needed to be safer with CCP on everything we could possibly derisk. Unfortunately, the buy and the sell side, they keep wanting to say, well, not right now. 

One thing that has happened right now this month is that transition to T+1. It took place actually at the end of May. And the smooth T+1 transition has cut the market default buffer by $3.1 billion. That's a hefty amount of collateral in its own right, and represents a roughly 25% reduction in collateral for US stock clearing per day from T+2. Fabulous news all round, well done all those who are involved. 

As ever, the rest of the news is made up of plenty of words of the Irish Stock Exchange crying for support the London Stock Exchange, not crying for support, but actually everybody around it, realizing that it has a fundamental problem, and much more you could get all those stories in Exchange Invest, the daily newsletter of the bourse business the exchange of information. If you want to be at the bourse business watercooler then consider subscribing, $375 per annum, we'll give you a 7 days free trial if you sign up today and you can get that from ExchangeInvest.com

Over in new markets, well, lots of excitement about the Texas Stock Exchange. Texas Stock Exchange is looking to break into the southern southeastern quadrant of the USA. It's very interesting and not before time in many respects, but how do you break into that country club duopoly to create listings? Smaller thresholds? It's very interesting all the same. 

At the same time of course, one could say that a lot of this could be a two-pronged approach to the largest investors are Citadel and BlackRock. For one thing Citadel hopes to find another payment for order flow income stream and that may be related to the ETF point because Blackrock being a huge investor, clearly, I would have thought their game is to try and get the listing fees down hugely for ETFs. And given the fact that they've got at least 433 ETFs of their own listed in the USA right now. Gosh, that could be a huge money saver, particularly if they could get the prices down to the sort of level that has been the case of the bargain basement competition between Dublin, Luxembourg, Vienna, and other companies such as the Gibraltar Stock Exchange, who are even more desperate and their fee structure before they were closed down in recent months. In that sense, both these big name investors may not need a sustainable, successful TXSE over the long term, as has often been the case with competitive upstarts. They're seeking to keep exchange fees low and a bullet to the head of the established operators so that they can increase their costs. So long as Citadel and BlackRock see a decent return on their investment we can't see whether the Texas Stock Exchange is going to last for the long term. 

If you want to understand more of these ramifications. You won't find them in the general media. You'll find them in Exchange Invest. Don't forget to sign up via ExchangeInvest.com

It was a busy week for deals in the parish, one interesting snippet I'm going to give you, data provider Preqin they are exploring a $1 billion sale. 

Allegedly London Stock Exchange, S&P are amongst the bidders for it according to sources speaking to Reuters. It's an interesting deal that could have ramifications for the broadly moribund TP ICAP as well, because they of course, have a huge data subsidiary, which is the bit that actually has fundamentally most value in it right now as opposed to their markets division. A sale of Preqin at a reasonable premium might excite investors to buy those TP ICAP data assets, which were being shopped around last year most recently what without a successful sale. 

If you want to understand why people will be shopping their data assets in this huge big data world, you want to consider getting a copy of my most recent book “Victory or Death?” Blockchain, Cryptocurrency, and the FinTech World. It is published by DV Books and “Victory or Death?” is distributed by Ingram worldwide.

Victory or Death?: Blockchain, Cryptocurrency & the FinTech World: Young, Patrick L, Sprecher, Jeffrey: 9788362627059: Amazon.com: Books
Victory or Death?: Blockchain, Cryptocurrency & the FinTech World [Young, Patrick L, Sprecher, Jeffrey] on Amazon.com. *FREE* shipping on qualifying offers. Victory or Death?: Blockchain, Cryptocurrency & the FinTech World

Don't forget while you're waiting for your copy of “Victory or Death?” to arrive, check out our live stream on Tuesdays at 5 o'clock London time, midday New York time it's the IPO-VID Live show. Catch the back episodes on Linkedin and Youtube by searching “IPO-VID”. The next show is looking to be an absolute corking, exciting, incredibly mega episode which will be truly truly really epic from all possible senses like everyone that we've had in the canon of episodes. I will look forward to you listening there. 

Our “Finance Book of The Week” this week incidentally, huge thanks to Paul Conn for his recommendation of this week's book of the week, which is “Co-Intelligence: Living and Working with AIby Ethan Mollick which shows what it means to think and work together with smart machines, and why it's imperative that we master that skill. That Book of the Week was in last week's Exchange Invest Weekend. EI Weekend is completely free publication separate from Exchange Invest the daily bulletin, it's free. You can sign up to an ExchangeInvest.com and last week was in fact an all time classic all about AI, our second special in the series. This week's book of the week will be announced on Saturday in the latest episode of the EI weekly series. 

Over in product news, China is planning higher transaction fees for high frequency trading, MSCI says South Korea's short selling accessibility is deteriorating the market and in Canada, the Canadian Derivatives Clearing Corporation announced the launch of a secured general collateral notes program. In other words, it's time to say bye-bye BAX baby swept away with the death of LIBOR. 

In technology news this week, IOSCO published their final report on market outages with a series of good practices to improve trading venues resilience in the case of market outages. 

At the same time over in the Colombo Stock Exchange in Sri Lanka, they made the Great Leap Forward to T+2, only one day behind 60.5% of the world's markets in the USA, notwithstanding also China, Mexico, India, and indeed Russia as amongst others. 

In regulation, there was a lot of talk about how the Gensler SEC keeps losing court cases. That was slightly masked by the fact that Gary Gensler was celebrating the 90th anniversary of the SEC. He was talking about the era's tour of the Securities and Exchange Commission with a hat tip to the great billionairess, of course the one and only songstress Taylor Swift. Anyway, new SEC rules on private funds have been thrown out by US Appeals Court judge recently the SEC Investor Protection rule has been vacated as well by a judge. The SEC suffered another series of legal defeats but it's not all one way traffic. The key is to ensure the baby / bathwater repo doesn't confuse what was a staggeringly over ambitious program of expansion beyond the letter and spirit of the SEC’s founding laws… and the sensible work being done to try and preclude rampant criminality, although one might argue that has already happened anyway, in crypto. 

The Gensler moves on crypto have been coherent, but he's been dragging the agency into dubious ground way, way, way beyond the original, beautiful, narrow aims of the Securities and Exchange Act of the 1930s which set up the precepts for the SEC. 

Elsewhere the CFTC has opened up the discussion this week. They're looking at proposed rules for events contracts. The proposed rules essentially being no, never, never, never, never. That's not terribly helpful but we live in hope.

Career path this week, fabulous news, we have a new Director General of FESE (European Federation of Securities Exchanges). Fabulous news altogether from Brussels as the wonks were digesting the Euro Parliamentary elections, the exchange Parrish was elated. The wise board FESE has have opted to elevate Rosa Amesto Plaja to head the highly effective Brussels exchange lobbying group. It's great to see a second woman heading the organization - Judith Hardt Director General having first employed Rosa in 2007.

You can actually catch Rosa on both my livestream IPO-VID # 047: Capital Markets: From Brussels With Love.

As well as PHD #059 (that's my wife's Positivity Hacks Delivered, from a Women On IT). How can Women On IT grow a career in finance. 

FESE has led the debate with aplomb for years in the parish and remains the most effective of all the securities exchange federations (along with EACH CCP and AFM one of the three most effective parish federations of all in market structure… Let's face it a fair few make a walking dead look vital). But that's not to detract from the brilliance of FESE, EACH, and AFM. I'm genuinely delighted to see how Rosa moves FESE forward and of course as Exchange Invest, and indeed individually Patrick L. Young builder of markets were delighted to support her endeavors and those of FESE as always. Congratulations instantly as a footnote at FESE membership now covers a footprint of all 27 countries of the European Union with Bratislava, Slovakia joining - or if my memory serves me correctly, actually rejoining but anyway, whichever it is, all of the European Union roadmap each individual nation securities markets are now within FESE.

Let's hope that FESE can manage to do its level best and make progress to ensure the next European Commission is an effective one, which seeks to reboot the European Union's flagging economy and who knows even delivered something that is worthy of the name of Capital Markets Union. 

Fascinating move finally in career paths this week, LSEG has appointed Pascal Boillat as COO. Fascinating all together because the new Chief Operating Officer of the LSEG (London Stock Exchange Group) remember, is going to be based in New York where his predecessor was based in London. So essentially Refinitiv continues to own the LSEG management with Out of His Depth Dave, the CEO of the group, a passenger atop the jaunty ship. Previous COO had been David Shalders he was London-based and it was announced he was heading to a UK insurance firm Howden in February.

And that leaves us with one fascinating snippet for the end of the week. It's not so much in Bigworld, as in big door this week. An elevator door from the long since destroyed (what an act of vandalism that was) Chicago Stock Exchange building has sold at Christie's Auction House for a pretty stunning $69,300 comfortably in excess of the $15,000 to $20,000 estimate. 

And on that mysterious and magnificent note ladies and gentlemen, thank you for listening to this Exchange Invest Weekly Podcast # 249. 

Join us daily via ExchangeInvest.com or if you have a new market and exchange you'd like to get built, get in touch. 

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

Links:

SEC To Shutter Office Behind Failed DEBT Box Crypto Lawsuit
CoinDesk

German Coalition Attacks 'Beer Tent'-Style Speech By Deutsche Börse Chief
Financial Times

Hong Kong Will Reportedly Stop Halting Stock Markets During Typhoons And Severe Weather
CNBC

WSE Operator GPW Wants To Address Revitalisation Of NewConnect Market This Year, CEO Says
PAP Biznes

Smooth T+1 Transition Cuts Market Default Buffer By $3.1 Billion
Yahoo Finance

Wall Street Frets Over Timeline For Centralized Treasury Clearing
Reuters

Ireland's Stock Exchange Needs Support
The Irish Times

New Texas Stock Exchange Takes Aim At New York's Dominance
WSJ

BlackRock, Citadel Plan New Texas Stock Exchange, WSJ Reports
BNN Bloomberg

Data Provider Preqin Explores £1 Billion Sale
Yahoo Finance

LSEG, S&P Among Potential Bidders For Data Provider Preqin, Sources Say
Reuters

MSCI Says South Korea's Short-Selling Accessibility Is 'Deteriorating'
The Business Times

The Canadian Derivatives Clearing Corporation Announces Launch Of Secured General Collateral Notes Program
TMX

IOSCO Market Outages - Final Report

IOSCO Publishes Good Practices To Improve Trading Venues’ Resilience In Case Of Market Outages
IOSCO

T+2 Came Into Force At CSE Monday June 10th
Daily FT

The Gensler SEC Loses Again
WSJ

Eras Tour Of The Securities And Exchange Commission | The SEC’s 90th Anniversary, SEC Chair Gary Gensler

US Appeals Court Strikes Down SEC Private Equity, Hedge Fund Oversight Rule
Reuters

New SEC Rules On Private Funds Thrown Out By US Appeals Court
Financial Times

CFTC Proposed Rules: Event Contracts
CFTC

FESE Appoints Rosa Armesto As New Director General
FESE

LSEG Appoints Pascal Boillat As COO
LSEG