096 Exchange Invest Weekly Podcast May 29th, 2021

Transcript:

This Week in the parish of bourses and market structure:

Nicholas Aguzin brings a gaucho wave to Hong Kong Exchanges while as predicted - David Craig exits Refinitiv under a cloud.

My name is Patrick L Young,

Welcome to the bourse business weekly digest.

It's the Exchange Invest Weekly Podcast Episode 096.

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

More details at ExchangeInvest.com.

The big celebration this week in the parish - other than 30 years of the Zagreb Stock Exchange, congratulations to Croatia - was the 125th anniversary of the Dow Jones Industrial Average. Happy birthday to the world's most famous stock index.

Meanwhile, the inevitable or at least inevitable if you are reading Exchange Invest... came to happen at the London Stock Exchange Group this week as Refinitiv Chief Executive David Craig was ousted from his long-standing position, which in balance sheet terms amounted to running the former Reuters financial somewhat into the ground.

The question was always: “Why bother bringing somebody with a track record of hopeless ineptitude into the newly merged entity anyway?”

That was surely a first predictor that LSEG may not have had a coherent idea of their acquisition strategy.

In Exchange Invest daily Episode 2034, I asked:

“The key question is sure, how many weeks do David Craig et all have in the Refinitiv C-suite?

And the answer was: For David Craig, precisely one month for the hapless (but golden parachutes) in DC as issue 2034 of Exchange Invest was published April 26th, one month to the day before his departure was announced.

As I went on to note last month: “It was hard to justify their presence in the Refinitiv C-suite in the first place, as the Paternoster Square C-suite looks likely to jettison bodies in a ‘sauve qui peut’ management panic stroke/shakeup.”

Thus, in reality, the title of CEO at Refinitiv was actually shorthand for “first merger full guy” and hey presto, as predicted, David Craig gets an unjustified fat payout and departs.

At least we've already seen the first clear casualty of this ill-conceived merger. The next few weeks could be instructive - will Craig's replacement Andrea Remyn Stone be building more loyalists into her team via the massed bands of recruitment consultants she has employed to date, or will she actually be trying to pare the bloated Refinitiv down to something within a few standard deviations of corporate fighting weight?

Alas, the realpolitik is that Paternoster Square, maybe more akin to the Borgias infighting with David Schwimmer as a kind of hapless Pope.

For the London Stock Exchange Group, this looks like a rapid admission of defeat on one level, but will it really drive the seismic change needed to make this deal at least less value destructive?

In some ways, the confusing factor was why the LSEG ever thought it coherent to bring David Craig into the London Stock Exchange Group fold, given his woeful track record?

After all, in 2011 when David Craig gained responsibility for the Financial and Risk business of Thomson Reuters, revenues were $7.5 billion. In the final year of his stewardship of the independent Thomson Reuters Financial and Risk business. Those revenues had declined to $6.1 billion, a $1.4 billion loss from the top line in six years when the rest of the world was experiencing somewhat of a growth spurt. With record atrophy of the top line, don't forget this wasn't just generic value destruction, there was M&A expenditure there as well.

During the time David Craig's management was in situ, he shaved $1.4 billion of revenues, yet oversaw spree acquisitions. Such as FXAII, Redi, and Aegisoft, all those expenditures which added nothing to the shrinking income of Reuters Financial before it was sold to Blackstone and then palmed off further to LSEG.

The real tragedy is that London Stock Exchange Group is not heeding these warnings with anything like the alacrity required to rescue the business which has already shed quality assets to buy antiquated data fluff at a premium price.

Meanwhile, Reuters itself has reportedly been warned by the London Stock Exchange Group that its plans to instigate a paywall on its content across the World Wide Web is in breach of the London bourse’s purchase of data provider Refinitiv, apparently limiting the means by which Reuters can charge for its editorial content on subscription models.

I suppose the cheery thesis here is that not all of the incompetent management is at Refinitiv, some were presumably left behind at Reuters.

Then again, at least Reuters and Refinitiv aren't Euroclear. The Brussels CSD was embarrassed this week by a $37 million coupon payment error on Unicredit Bank bonds.

Over in results this week:

Another bumper week, all the news was in ExchangeInvest.com - the bourse business water cooler.

The Multi Commodity Exchange of India announced a net profit decline of 41% which was disappointing.

The Hanoi Stock Exchange reported a record annual profit for 2020 while Tel Aviv's Q1 slipped by $100,000 year on year.

However, the excitement in Israel surrounding deal flows - Q1 2021 saw 33 new IPOs, the highest number of listings in a single quarter for the Tel Aviv Stock Exchange since 1993.

In new markets:

We had a bumper week for new markets once again, all the details were in Exchange Invest, get your free trial now from ExchangeInvest.com.

One highlight, AirCarbon Exchange, a new Singapore-based environmental market.

All the other details as I say, we're in Exchange Invest daily. For an exciting week, including FairX and news of the Cyprus Stock Exchange's privatization.

That of course leads us into deals, where it was once again a busy week for deals in the parish and they were all to be found in Exchange Invest daily - the newsletter no person can afford to be without in capital markets and market structure.

Meanwhile, if you're looking for something to read, whether you're in lockdown, whether you're trying to get to the amber zone, whether you're actually traveling through the green zones, or even if you're just staying at home and looking forward to something to try and learn about the future of your career and how that might develop.

Don't forget my latest book “Victory or Death” - Blockchain, Cryptocurrency in the FinTech world. COVID-19 we know is a killer and can it kill your career, or is that the impact of FinTech destroying your business?

It's a “Victory or Death” world of risk and opportunity. “Victory or Death” is published by DV books and it's distributed by Ingram worldwide. Don't forget while you're waiting for your copy of “Victory or Death” to arrive, we are live on Tuesdays with the IPO vid Livestream.

Last week, we had an interesting discussion looking at prediction markets with Flip Pidot, a leading figure in the prediction market business, particularly in the political arena. The Livestream comes to you every Tuesday at 6 pm London, 1 pm New York time albeit on Tuesday, the first of June, we're having a brief hiatus because we are in the aftermath of the Memorial Day bank holiday in the United States of America and also the UK bank holiday in the UK. Next, it’s gonna be out early in June and we've got the fabulous Kenny Polcari talking about the New York Stock Exchange.

Technology news this week:

The Multi Commodity Exchange of India invited a new round of bids nearly three years after a failed attempt to acquire software for its spot bullion trading platform. MCX has opened a new tender to power the market which is expected to be located this time not in Mumbai, but in the GIFT city financial center that's the International Financial Centre being built out in Gujarat.

Meanwhile, the London Metals Exchange will replace the LMEselect system with its parent, Hong Kong Exchanges’ Orion trading platform in the near future that came in the same week. LME announced it would launch lithium hydroxide and three other scrap futures contracts this year.

Those announcements were made at the LME Asia Metals week - a virtual symposium this week due to COVID-19 and all that, but it was the first opportunity to see the new Chief Executive of the Hong Kong Exchanges group, Nicolas Aguzin in action. Hong Kong will provide Chinese investors with financial products and the platforms to sharpen its role as the gateway between the world's second-largest economy and the global capital markets.

Aguzin said in his first speech as HKEX Group CEO this week, taking office and enjoying indeed on the back of that speech, a 5% stock price spike on his initial remarks.

Down slightly further away from Hong Kong, in Australia, the Australian Stock Exchange's group, the self-proclaimed technology entity announced that after 23 years of service, its Deputy Chief Executive Officer and Group Executive of Business Development, Peter Hiom has resigned and will be leaving the organization on the first of July.

PLY: Good luck to Peter!

He's leaving to further his interest in FinTech and Blockchain technology. As part of that approach, he is going to be joining Motive Partners, a global investment firm focused on financial services technology companies, he's going to be an Industry Partner.

PLY: While this comes as quite a surprise in industry terms that of course leaves the ASX CEO without a useful front man too. We like when they need somebody to front the blame for failing projects. Perhaps Peter had just had enough after a lucrative generation with the Australian Stock Exchange groups, and he's made a stunning return on his move to Oz from his career and the middle echelons of LIFFE (London International Financial Futures Exchange) over 20 years ago, and he can comfortably now move on to pastures new, without being well, the patsy who seems to carry the blame for every ASX failing and public.

Of course, an interesting footnote on Motive Partners - amongst their cadre, is one Blythe Masters, the former CEO of Digital Asset who Peter got to know a great deal better, during the period they were working on the currently somewhat delayed chess project while Blythe was chief executive of Digital Asset.

And that's ladies and gentlemen, in a week when the pandemic of Covid 19 meant the Bank of England did not pay a dividend for the first time in more than a generation, things are looking worse still in Iran, which is banned the energy-intensive mining of cryptocurrencies such as Bitcoin for nearly four months. President Hassan Rouhani said on Wednesday that the country is facing major power blackouts in many cities, and therefore the mining of Bitcoin and cryptocurrency has to take a backseat to the day-to-day power needs of the nation itself.

And on that mysterious and magnificent note, ladies and gentlemen.

My name is Patrick L. Young,

Thank you for listening to this, the 96th episode of the Exchange Invest Weekly Podcast.

I wish you a great week in life and markets. And don't forget, check out our YouTube Livestream IPO-Vid, you can find it. We've got a cornucopia of back issues of exciting Livestreams on all sorts of issues and financial markets that you might care to drop in and listen to.

Once again, my name is Patrick L. Young, have a great week in life and markets. Join us next week for the Exchange Invest Weekly Podcast, and that's going to be Episode 097.

LINKS:

Refinitiv Boss David Craig To Leave Parent LSEG End Of Year
Reuters

Troubled Refinitiv Integration Claims Chief Executive's Scalp
The Times

Not So Fast! Reuters Warned That Paywall Plan ‘Breaches LSE-Refinitiv Deal Terms’
City AM

LSE, Reuters In Talks Following Dispute Over News Website Paywall
Investing

Euroclear Reversing Payments Mistakenly Made On UniCredit Bonds
Reuters

UniCredit's Coupon Debacle Is A $37 Million Game of Whodunnit
Bloomberg

MCX Q4 Results: Net Profit Declines 41%; Announces Dividend Of ₹27.75/Share
Livemint

Hanoi Stock Exchange Earns Record Profit In 2020
VnExpress International

Tel Aviv Stock Exchange Reports The Results Of The Financial Statements For Q1 2021
PRNewswire

AirCarbon Exchange: World’s First Carbon Negative Trading Platform
Aircarbon

DBS, SGX, Standard Chartered And Temasek To Take Climate Action Through Global Carbon Exchange And Marketplace
PR NewsWire