108 Exchange Invest Weekly Podcast August 21st, 2021

TRANSCRIPT:

This week in the parish of bourses and market structure:

Sebi goes DLT as National Stock Exchange profits jump in India and at the National Stock Exchange of Australia, ‘there’s trouble at mill…’

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest weekly podcast, Episode 108.

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.

This week we saw two forms of “Trouble At Mill…”

First there was Borsa Italiana as part of Euronext. Italy 24 News reported the clash on the CEO (that is the CEO of Borsa Italiana) between the two Italian and French banks.

Meanwhile, the politicians in Italy were getting very vexed too. It looks like a pitch battle as France seeks to run Euronext, AKA business as usual. And Italy as the largest component of the Euronext group reckons it gets a bigger say. Who replaced “Rafa” in Milan is not a defining point (even where refer Jeruselmi himself has not even apparently confirmed he’s retiring yet.)

Euronext, meanwhile, issued a somewhat dismissive statement:

“We are working with Borsa Italiana colleagues on the business plan, any assumption on its contents is pure speculation.”

On “the trouble at mill” too and over to the National Stock Exchange of Australia.

“The former competition watchdog chief Graeme Samuel abruptly quit the board of the National Stock Exchange of Australia just four months after he joined it to considerable fanfare.”

Less than 24 hours before the announcement, The Australian Financial Review had revealed that the NSX’s interim chief executive and major shareholder John Karantzis had been accused by the Australian Tax Office of hiding income in “known secrecy havens” and falsifying his tax affairs, while blasting his “intentional disregard” according to the ATO for the law and his attempts to “hinder” a $10 million tax debt recovery.

Mr. Samuel had told the Australian Financial Review: “I had some expectations as to the pace of restructure and the governance of the NSX and they have not been met.”

Recently, of course, NSX said Mr. Karantzis would be stepping aside as managing director of the exchange to focus on his role leading iSignthis, which has been controversially suspended by the Australian stock exchange for almost two years.

Nonetheless, there is considerable heft on the NSX Australian board (Professor Michael Aitken AO for example) but clearly it’s difficult to support the notion of Mr. Karantzis as a bourse owner given his current predicament.

Over in the Brussels bugle, The Financial Times was reporting Robinhood‘s growth to hinge on the loyalty of neophyte traders. They were quoting Thomas Peterffy, the founder and chairman of Interactive Brokers, who told the FT that he saw large account transfers of between $50,000 and the $100,000 invested coming over from Robinhood.

And I quote:

“Every day we see maybe 10 accounts come to Interactive Brokers from Robinhood. In a year and a half, I’ve only seen one go the other way,” Peterffy said.

That’s bad for Robinhood, but good for markets as investors mature and head for IBKR’s sensational, if mind bogglingly complex concept of user interface.

Results:

It was a mind bogglingly busy week for results in the parish. All the deals were in Exchange Invest’s 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:

Hong Kong Exchanges posted their fourth straight record first half profits. Revenue and other income we’re up to $10,909,000,000 Hong Kong dollars (24% higher than the first half of 2020) with an EBITDA margin of 79% (2% higher than the first half of 2020).

It’s a great debut for the new chief executive Nicolas Aguzin. Indeed, Aguzin went on to note that “The Hong Kong exchanges IPO pipeline is at record levels.” Perhaps as many as 200 IPOs are warming up and preparing for a public future.

Meanwhile, the Tel Aviv Stock Exchange reported the results of the financial statements for the second quarter of 2021 and they saw revenue up 15%, adjusted EBITDA up 25%. Super numbers all together.

They were unlucky because they were somewhat overshadowed by the superstars of the week, the National Stock Exchange of India, whose consolidated net profit rose 66.25% in the June 2021 quarter.

Given these numbers against the background previously of Intercontinental Exchange, NASDAQ and other major department store names and Young’s pyramid, coming up with spectacular profits of more than 20+%. I’ll spare the underperforming competitors the embarrassment of being named as they seek to spin away what amounts to their poor facsimile of the “Hindu rate of growth” concept.

It’s not quite a new market, but the closest thing we got this week and it’s exciting to hear:

The World Quantum Growth Acquisition Corporation announced the pricing of their $200 million Initial Public Offering in the USA.

In other words ‘Xav SPAC a go go…’ with ace management including Antoine Shagoury and Serge Harry as well as Peter K. Lenardos on the board.

World Quantum Growth Acquisition Corporation looks an interesting position. We hope it will find something fascinating to acquire in the parish of bourses or at least adjacent there too.

In deals this week:

Another busy week there into, all the details in Exchange Invest, a couple of highlights for you:

The TMX group completed the acquisition of the AST Trust Company of Canada.

Meanwhile at the Santiago Stock Exchange, they signed an agreement to transfer their technology to and therefore obtain a stake in the Dominican Republic’s exchange (BVRD).

Overall the stake appears to be 6% for the Santiago Stock Exchange, becoming the technological operator of the equity and fixed income market of the Dominican Republic exchange. It’ll also be a strategic partner to collaborate on the development of the equity market.

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Meanwhile, in cryptoland, in the USA finCEN, they announced a $100 million enforcement action against the unregistered futures commission merchant bitMEX for willful violations of the Bank Secrecy Act.

That was met by a somewhat well interesting statement from bitMex, crypto is changing, and bitMEX is changing with it.

That blog post did not address the criminal charges filed by the US Department of Justice against former bitMEX CEO Arthur Hayes and other executives. Soon after we got a further announcement from bitMEX.

AC Milan Football Club have signed a partnership with bitMEX to be the first ever sleeve sponsor.

Well, truly the last announcement says that all. Financial brands sponsoring kickball has traditionally been the preserve of the more dubious end of the fly-by-night end format of the financial ‘services’ (ahem) spectrum.

BitMEX may have paid the fines but it isn’t looking at branding itself as much more than being a flashy punting shop, judging from its actions.

In the macro, the simple truth is nothing is changing in crypto – the children who foolishly wanted to defeat the establishment have been caught red handed, and like rabbits and headlights are trying to get their heads around what they ought to have been doing from the very beginning: applying sensible thresholds of regulation.

Other fines this week, the crypto exchange Poloniex, they’re going to pay $10 million to settle an SEC probe, which also claimed it failed to register appropriately.

At which juncture, a crypto exchange called Poloniex will swiftly noting on Twitter that they were not fined… as Poloniex is now a non-US client crypto exchange which was spun out of Circle who took the rap from the SEC, who had then owned Poloniex, whereas Poloniex that continues to exist is now owned by Polo Digital Assets Limited – a deal completed in late 2020, leaving US customers behind with circle and indeed that legal liability to the SEC.

Product news this week:

China will have a settlement fee for Stock Index Futures and Bond Futures Trading from August 16th to December 31st 2021.

Over in India, the National Stock Exchange, they’re going to be allowing US-listed stocks to be traded via the NSE’s International Financial Services Centre platform.

That’s of course in Gift city in Gujarat, the New Indian financial centre.

Bit of a shake up for those who were looking for some sort of consolidated debt that was relating to perhaps botox or other processes.

China’s exchanges have banned cosmetic surgery loans from being a component in debt securities, the Shanghai and Shenzhen stock exchanges banned consumer debt linked to cosmetic procedures from asset backed securities last week.

An interesting case of China trying to make its bond bubble less, well, I suppose, perky, or at least reduce the potential for a collateral wobble, with botox loans et al banned from ABS in China.

Surely this couldn’t have fallen foul of a due diligence failure as one would presume there was a steady stream of ready volunteers in the investment banks and rating agencies to undertake such arduous investigative assignments?

Meanwhile, US banks and brokers, they’ve suddenly got to move on, after only three decades of ‘talk talk’. We’re setting the stage they say for the shift to one day equity settlement. GameStop and all that suddenly seems to have managed to get a boot up the posterior of the US equity settlement movement.

Can it really be done so smoothly in such a short period of time, given the many decades that have been invested in trying to get from T+3 to T+1? And of course, the pain that we all endured for many years as they finally managed to reach T+2 in the middle.

Elsewhere one bond this week, the Chana futures contract on NCDEX, was going to be a new one of those coming this week, but it was banned by the Securities and Exchange Board of India (SEBI).

Which moves us on elegantly to technology, SEBI, in a very exciting manoeuvre have asked depositories to create host and maintain a system using distributed ledger technology (DLT) or blockchain (as it’s better known) to record and monitor the creation of securities as well as to monitor the covenants of non convertible loans.

Elsewhere, an interesting bookbuild for the folks doing interesting bookbuilds, that Appital, they’ve secured £2.5 million in investment led by Frontline Ventures.

Finally, one piece of news from the courts in relation to technology this week:

The court agreed with Symbiont.io in part, finding that the IHS markit firm Ipreo had breached the non-competition pact ‘’as soon as Markit’s acquisition of Ipreo closed.’’ The net result was a $71+ million dollar settlement against IHS markit.

Crowdfunding news this week:

Two international companies are going to soon launch on ArawakX’s crowdfunding platform. That’s ArawakX, a new crowdfunding platform at SME exchange in the Bahamas in the Caribbean.

ArawakX spokesman and Chief Technology Officer D’Arcy Rahming Jr. said: ‘’We’re excited to bring these opportunities to the Bahamas and proud to say that they both have Bahamian founders with international advisory boards.”

This is marvellous news from the Bahamas where ArawakX is bringing its first issues to the crowd. Great effort by D’Arcy Rahming Jr., D’Arcy Rahming Sr., as well as the entire ArawakX team.

Regulation news this week:

The ambitious SEC boss, Gary Gensler is cultivating Senator Elizabeth Warren. So said the New York Post, who were of course catching up with a trend that we’d noticed in Exchange Invest, the daily newsletter of the bourse business, from the moment that GG was first being proposed as SEC chairman.

Elsewhere, slightly south of the border, Mexico is apparently preparing a new rule to encourage the routing of more business to BIVA.

BIVA being the upstart competitor platform that’s seeking to do more business against the incumbent monopoly, the BMV Mexican exchange.

Career paths this week:

State Street’s David Newns has taken over as CEO of the SIX Digital Exchange. That makes him at least the third, if not the fourth, permanent CEO of three year old SDX following in the footsteps of Martin Halblaub and Tim Grant, amongst others.

The worry is that SDX seems to have had a remarkable level of flux in senior management during its brief three year existence, even though it has yet to be actually formally launched or indeed even formally regulated. Although this exchange assures us that this is coming soon.

Finally, in people news this week:

One sad piece of news, RIP Wayne Luthringshausen, he was the founding President and CEO of the OCC (Options Clearing Corporation), the unified clearinghouse for stock options across the United States of America. Sad to hear of his passing at the relatively young age of 80, RIP Wayne Luthringshausen.

That only leaves us this week ladies and gentlemen to report one interesting piece of news, the Romanian “King of the Roma” – King Ciaoba has launched a cryptocurrency project Gypsycoin.

Clearly with branding like “Romania” and “gypsy” this is what one might call an “acid test” of a bubbling crypto bull market.

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young.

Thank you for listening to this Episode 108 of the Exchange Invest weekly podcast.

I wish you a great week in life, markets and indeed blockchain.

LINKS:

Borsa Italiana: Clash On The CEO Between The Two Italian And French Banks. And The Democratic Party Also Takes The Field To Defend Piazza Affari
Italy 24 News

Euronext Says Any Assumption On New Borsa Italiana Plan “Speculative”
Reuters

Graeme Samuel Quits NSX Over Governance
The Australian Financial Review

John Karantzis Has Everything Under Control
The Australian Financial Review

Robinhood’s Growth To Hinge On Loyalty Of Neophyte Traders
Financial Times

HKEX Posts Fourth Straight Record First-Half Profit, Misses Estimates
South China Morning Post

HKEX Releases 2021 Interim Results
HKEX