078 Exchange Invest Weekly Podcast January 23rd

TRANSCRIPT

London Metals Exchange ring under threat of closure. London Stock Exchange Group - Refinitiv under threat of deal closure. ...And in the United States of America, #Genslerfreude is a thing. ‘How, is the hopey Changey thing working out for you now, bankers?” to paraphrase the one zinger of Sarah Palin's political career.

My name is Patrick L. Young. Welcome to the bourse business, weekly digest. It's the Exchange Invest Weekly Podcast, episode 78.

Good day, ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the weekend market structure or the analysis of the week’s many events and happenings can be found in Exchange Invest Daily’s subscriber newsletter, the unique guide to the bourse' business, sent daily to your inbox. More details at ExchangeInvest.com.

Mega Russia news: around 5 million people started investing on the Moscow Exchange in 2020. That's a simply astounding number of new entrants to any national market. Well done MOEX. In this case, it was more than all the previous years put together, as total investor base jumped from 3.8 to 8.8 million users.

Over in London, farewell to the floor? After 144 years, the London Metal Exchange is proposing closing the trading ring. That LME proposal has emerged during COVID times where traders have previously, in better healthier climes, swapped metals like copper and lead using shouts and hand signals for 144 years. The move seems to be a bid to attract more financial players. The call auction itself made sense for a long time, but in an era where we can do so much business in Zoom, the ring's appeal appears to have been atrophying during the era of COVID.

A 4,000 square foot floor space saving is a handy one in the City Of London's heady property market. And it allows LME some more flexibility; if the Exchange wants to expand metals dealing beyond a specific London centric, oligopoly of operators.

Elsewhere this week's Euro insanity: Brussels says it won't be rushed on the City of London's access to the European Union financial services, Commissioner Marie McGuinness saying that Brussels would not grant Britain's financiers access to the block before assessing the risks to financial stability.

...And that to do otherwise would be. And I quote an “experiment.”

This is the insanity of Brussels double think. The spite and anger remains in every EU utterance of the once interesting project is now just a political embarrassment carried on by useful ideas like Mrs. McGuinness.

Elsewhere. Speaking of useful idiots in the European Union: “the European Union needs a master plan to grab European finance from London.”

...To be charitable given this statement was made by MEP Markus Ferber on Martin Luther King day., perhaps it's just a case of MEPs, have a dream. To be realistic It was rather moronic clickbait volume umpteen and on a quiet U S bank holiday news day, oOne publicity hungry MEP got the attention his ego craves.

Adding perspective, it took Brexit for the likes of serial EuroParliament mediocrity, Marcus Ferber, One of the men, who brought us MiFID II, to suddenly try to think in an enterprising manner. So now they want something akin to the five-year plans that are even being repudiated by the North Korean leader nowadays.

Meanwhile over in the EU, how is that decade long chimera, I mean, “Masterplan,” the Capital Markets Union going?

The UK has an ongoing problem, as has Europe, about high-tech listings. This week, it was inadvertently reported as being somehow related to Brexit. The truth is as Xavier Rolet pointed out in Exchange invest EI1949. “Europe simply does not have the equity capital markets that understand and price innovation appropriately.”

Tech firms listing in America is a hardy perennial as the U S markets work. And as even former London stock Exchange, Xavier Rolet has noted above: European markets don't when it comes to achieving queers, Insatiable levels of investor appetite at endlessly healthy to high valuations... These are simply not achievable outside of the United States of America and arguably certain parts of Asia. In Europe: They definitely don't exist.

In results news: Interactive brokers saw excellent Q4 results. They beat expectations, but understandably given the COVID driven volatility of the markets, IBKR were coy about any future predictions or outlook given the volatile economic climate.

In deals, finally, we have a completion date. It hasn't been delayed as often as the new James Bond movie, but the date is now set:

January 29th, the day on which London stock Exchange Group’s stock may yet pop. And those with firsthand experience of the Reuters, Thomson Reuters, Reuters, financial behemoth later, known as Refinitiv.... We'd probably be toasting the demise of LSEG in City hostelries if only lockdown was not a fact.

Well, great news for bond platform Trumid. Their value has jumped once again in another financing round. This time led by DST, value jumped by 40%. Taking the companies privately held worth to around $1.4 billion. That contrasts with the sad news that female run Open Door, US treasuries trading firm has ceased operations elsewhere.

Good to see somebody investing in their own idea. KRM 22’s CEO Keith Todd who founded the business just a couple of years back has been acquiring more shares in the multifaceted vendor.

Over in crypto land, the former Canadian prime minister, Stephen Harper has been talking Bitcoin. He sees it as a possible future reserve currency.

Well, actually as an economist, what he really says beyond the headline is there will be a diversity of currencies and asset holdings in a digital world. QV, for example, my initial book “Capital Market Revolution!” of 1999.

In product news this week, AFME: they've been counselling the European Union with a new report. They're calling for hybrid shares to plug the COVID corporate capital gap. Companies, especially SMEs are willing to pay a premium and avoid dilution. It's an ugly situation COVID world. And there are no easy answers.

Speaking of funding vehicles SPACs are booming in New York, but not in London. Quartz examined some of the details this week. And again, that's the origin in the John Detrixhe article of this excellent Xavier Rolet quote, “Europe simply does not have the equity capital markets that understand and price innovation appropriately.” Xavier, formerly the boss of the London Stock Exchange is currently a director of the SPAC Golden Falcon Acquisition Corp that raised $300 million on the New York Stock Exchange late last year. Elsewhere London Stock Exchange are seeking accelerated IPO timeframes in their listing review. Initial public offerings in London currently take five weeks from publication of the registration document to these stocks, creating a debut.

Elsewhere Worrying news about Brexit driving swaps trading to us platforms. The EU have been handing business to the United States of America in Euro and Sterling swaps as a result of their bizarre attitude towards the Brexit situation.

Over at the LME, Good news. Their steel contracts are building momentum. Useful fact of the week: Remember steel is the world's second largest commodity after crude oil. And yet curiously it's taken an incredibly long time to gain traction in steel futures compared to the panoply of liquid oil contracts across the world.

Technology news this week, exciting times for SETL, the distributed ledger technology provider. They've completed the world's first CBDC - CBDC, I hear you ask? - Central Bank Digital Currency. So SETL has completed the world's first Central Bank Digital Currency fund transaction on a live market infrastructure.

Absolutely fascinating innovation with some big name partners, including in this case, the Bank of France.

Elsewhere, the CME group announced they successful completed migration of the Brokertec European Union government bond and repo trading platform to the CME Globex. That of course comes in the wake of the acquisition of NEX Group a couple of years ago.

Elsewhere, a little bit of head scratching discussion in “The Australian” newspaper about how ASIC, the Australian regulator “burst into action” as the stock market ground to a halt. First of all, ASIC and “burst into auction” is a coagulation of phrases I had not previously considered. Secondly, the springing into action seems to have been a mass outbreak of blame storming from the self-styled technology company, the Australian Stock Exchange and the Australian regulator to apportion blame to absolutely anybody except ASX or ASIC despite the fact that this latest meltdown in December, 2020 amounted to a very similar failure as took down the market four years earlier.

A pause to Regulation news per se this week, presumably as a result of the inauguration of Joe Biden as the president of the United States of America. However, there was one piece of news which dominates Career Paths.

#Genslerfreude is real. Joe Biden has tapped Gary Gensler, the former chairman of the CFTC Commodity Futures Trading Commission as the new incoming SEC chairman.

He's also chosen a somewhat firebrand head of the Consumer Financial Protection Bureau. At the same time, #Genslerfreude is a word these days; the ‘shameful joy’ of seeing the bankers get the worst possible choice as SEC boss, and indeed an anti-business Warrenite as their consumer Czar, which must be surely precious little payback for the damage that we can expect to free markets from the toxic chairman, Gary Gensler. It's a sad moment for US markets and may inadvertently give overseas financial centers like London a chance to capitalize on America’s swing towards what will likely amount to counter productive overzealous regulatory activity. For the parish overall, we can only hope some Gary Gensler initiatives actually help challenge the banking oligopoly. Such as for instance, ending the payment for order for farago on the U S Stock Exchange.

Elsewhere, we got one exciting piece of news on the NSEL scam Anjani Sinha has been arrested. He was the former managing director of the cash Exchange. At the same time, I can't help, but chuckle because the news reports told us that the investigation into the NSEl fiasco has been expedited.

...That's concerning a fraud that took place in India in 2013, with, in this particular instance, a case filed in 2015 resulting in the arrest of the former NSEL MD... well... only six years after the filing of the initial paperwork(!), in 2021.

Great news this week, Jack Ma made a reappearance. After several months, he spoke to a group of teachers on a Zoom call that was possibly the most valuable Zoom call in stock market history. No less than $60 billion were added to Alibaba’s market capitalization. As a result of. Well, former teacher Jack Ma speaking to current employees in the sector. Putting that in perspective in parish terms, $60 billion would just about buy you the Chicago Mercantile Exchange group outright.

And on that magnificent and mysterious note, ladies and gentlemen: My name is Patrick L. Young. Thank you for listening to this Exchange Invest Weekly podcast. We will return in seven days time: have a great week in markets.

LINKS

Almost 5 Mln People Started Investing On Moscow Exchange In 2020

MOEX

After 144 Years, London Metal Exchange Proposes Closing Trading Ring

Wall Street Journal

London Metal Exchange Proposes Closing Trading Ring

Marketwatch

LME Issues Discussion Paper On Future Market Structure

LME

EU Needs 'Masterplan' To Grab Euro Finance From London

KFGO News / Reuters

EU Politicians Pushing For 'Masterplan' To Steal City Jobs From London And Promote Euro In Global Trade