109 Exchange Invest Weekly Podcast August 28th, 2021

Transcript:

This week in the parish of bourses and market structure:

Encouraging results from Moscow Exchanges group, ZAR X closed down in South Africa, ASX tech exposed and all manner of shenanigans as the CME deny that they’re looking to take over CBOE.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest weekly podcast, Episode 109.

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.

CME Group denied rumours of a bid for CBOE global markets this week in a $16 billion deal apparently happening according to the Financial Times. It was one of those brutal put downs of the never talk, know nothing about it, good grief, nothing to see here, etc, etc etc genre. Quite spectacular all together.

On the macro, the biggest point to note here is how the CBOE’s inability to get their IR message across has left the stock becalmed for some time. Somewhat unfairly. It also lacks natural predators (and a CME bid would by the way, be one where CME mostly cannot benefit from CCP content given CBOE’s activities in single name options. Albeit It would also take CME big time into cash equity markets which CME have long avoided). We shall see whether there turns out to be any truth in this rumour in the monster comm. Needless to say the analyst fraternity got their knickers in an enormous twist.

Meanwhile, over in South Africa, the financial watchdog there suspended the licence of the Johannesburg Stock Exchange’s competitors ZAR X. They were, as you may recall, the first stock extension 58 years to be established within the Republic of South Africa.

The suspension seems to result from a non-compliance with various sections of the act relating to capital adequacy and liquidity. ZAR X have 90 days to rectify the situation or face licence cancellation, but clearly the brand damage is already rather immense.

It was a busy week for results in the parish. All the deals were in Exchange Invest, 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 summer edited highlights:

ASX’s profits slipped, no surprise there.

Meanwhile, over at Moscow Exchange, they announced, well some rather healthy operating income up 9.7% in

In new markets, two items to talk about highlights this week:

IFSCA, they’ve done a pilot run of the International Bullion Exchange ahead of on October 1st planned launch that’s in the Gift Gujarat Financial Centre.

Equally, the Zimbabwean Commodities Exchange is open for business. The government has officially launched the Zimbabwe Mercantile Exchange (ZMX) for agricultural trading.

In deals, nothing finite obviously these CBOE not talking to CME was the biggest and most exciting non-deal of the week. Equally another non-deal but it seems to be something that may yet happen. The National Stock Exchange of India they’re inching closer to acquiring NCDEX (the Indian Commodity Exchange) of which of course, they were originally a co-founder. Possibly a slight issue with the S&P Global takeover of IHS markit. However, it seems to be as expected the UK watchdog has begun its probe into the merger. A lot of people are still getting back of course, to the excitement of it the idea that CBOE looks like it will take over a bit. I can’t honestly say that I tend to agree with them. The analysts have been delirious and those who only see exchange M&A have been parading their world ignorance for days now, at least the CBOE share price has been moving up.

The only tricky question remains who might bid?

ICE and NASDAQ would attract antitrust. Will Deutsche Bursa want to revisit their ISE experience? (I doubt it would frankly answer the German hassen authorities even let them) apart from a paucity of plausible buyers, his idea that CBOE is about to be bid for is a great thesis or what one might call a summer story.

If you’re still enjoying your summer and looking for something to read, don’t forget, pick up a copy of my book “Victory or Death” – Blockchain, Cryptocurrency and the FinTech world.

Equally if you’re interested in Valereum Blockchain, of which I’m the Executive Director. Pop over there, they’ve got a fabulous telegram group and also in Zazzle, we now have a merge store. If you’d like to buy yourself a velarium t-shirt or something equivalent to salute your desire to be part of the revolution.

“Victory or Death” is available from Ingram worldwide distribution and you can get it on Amazon and in leading bookstores.

Meanwhile, don’t forget IPO-Vid will actually be running an AMA (“Ask Me Anything”) about the book “Victory or Death”. That’s coming up on September the 14th when the IPO-Vid livestream returns from its summer holidays.

In crypto land, lots of stories this week, Coinbase are building a $4 billion dollar cash pile ahead of possible regulatory tightening on what some say could be a crypto winter. Equally there have been all sorts of excitement around the US cryptocurrency, bourse Coinbase entering the Japanese market.

Elsewhere, one last market, for Binance, they’ve pulled out of Brazil for their futures trading. And indeed all Binance users are now finally subject to immediate KYC verification. The Financial Times posted to tell us a lot of things that you could have known, well, six months ago, a year ago, 18 months ago, if you’ve been reading Exchange Invest noting that crypto exchanges are booming for now. But of course, the problem remains: pricing Binance is averaging trading fees of 0.03% on $6 trillion worth of transactions. So in other words, that’s $300 per million, where the legacy exchanges are at maybe 50 cents per million (that’s before the regulatory crackdown, et. al., which is doubtless going to come to these markets).

And indeed that was followed up in Exchange Invest this week with a very interesting story about how and why crypto exchanges are faking their trading volumes.

Crypto ETP’s, their fees cost up to six times more than third-party custodians. I think we can see a high price theme this week in crypto news for across the blockchain or at least the cryptocurrency and the blockchain world.

In product news this week, the CBOE futures exchange are listing AMERIBOR term 30 year futures, those coming on September the 13th, 2021.

And Thailand’s Central Bank and Palestine Central Bank are amongst those considering a digital currency. In the UK we get a lot of stories about a central bank digital currency with a twist, given the fact that the vast majority of business goes through a real time gross settlement in the wholesale market. Understandably, a large number of people within the city of London are pushing for the idea that their central bank digital currency should actually be aimed at Foursquare at the wholesale market.

Hongkong Exchanges are launching derivatives products on the new MSCI China A 50 Connect Index. That will be interesting to see the first mainland Chinese index product listed on the Hong Kong exchanges in the derivatives division.

Technology news this week was completely dominated by the ASX completion of the independent review of the November 2020 equity market outage. Ultimately, well, what a cluster mess of what we all knew all along the ASX crash had been caused by gaps in project testing, as it went ahead with upgrade despite not being ready, what an absolute shambles and indeed a very embarrassing moment for the self-styled technology company, the Australian Stock Exchange group.

Johannesburg Exchange had a minor outage trading was delayed after they had record volumes, causing a frustrated series of JSC traders to walk out as the bourse was apparently unable to trade.

Meanwhile, in regulation there was a confusion and discussion: Can SEC’s Gary Gensler Offer More Than Tough Talk? went the Bloomberg headline.

Meanwhile, Mark Cuban, the gazillionaire investor,was slamming Gary Gensler for the complexity of SEC market rules and was asking Gensler to engage more constructively with retail investors.

Career paths this week, well, one highlight one sad, low light really. The passing of the former chairman of the CFTC Philip McBride Johnson, the Johnson in the Shad, Johnson accord, which enabled the trading of single stock options.

The passing of the regulatory titan, former CFTC Chairman Philip McBride Johnson is a sad event for the parish and comes at the tricky moment when the SEC appears to be trampling on the toes.

And finally, this week, what can we say about Afghanistan? Well, I’m going to quote Tim Stanley in the Telegraph. Mr. Stanley, who is an expert in American affairs, and very much an Americano file, however, has been disgusted as most of the free world has been by the antics of the Biden presidency in the course of the last week.

And I quote, Tim Stanley’s zinger of a statement:

“The old establishment, the Democrats and Republicans, who intervened and surged in Afghanistan, are just not that competent. It was they who committed America to building a foreign democracy in the midst of a civil war – a tall order for a nation that can’t even free Britney Spears.”

And on that bombshell ladies and gentlemen.

My name is Patrick L. Young, thank you for listening to this 109th episode of the Exchange Invest weekly podcast.

I wish you a great week in life and markets.

LINKS:

CME Group Denies Rumors Of A Bid For Cboe Global Markets
CME

CME Denies Media Report Of $16 Bln Takeover Bid For Rival Cboe
Reuters

CBOE Shares Surge After Report Of $16 Billion Approach By CME
Bloomberg

CME In $16bn Bid For Chicago Exchange Rival Cboe
Financial Times

Financial Watchdog Suspends Licence Of JSE Competitor ZAR X
News24

ASX Profit Slips Amid Highest Year Of Listings In Over A Decade
ZDNet

2021 ASX Annual Report And Appendix 4E

2021 ASX Full-Year Results Media Release