110 Exchange Invest Weekly Podcast September 4th, 2021

Transcript:

This week in the parish of bourses and market structure:

Abu Dhabi Exchange entering the derivatives market powered by NASDAQ, while a new exchange has nearly 1% of the population of the Bahamas signed up, after only being open for a matter of weeks.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 110.

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 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 the UK’s Financial Conduct Authority (FCA) announced the world’s biggest crypto exchange Binance is not capable of being supervised properly and poses a significant risk to consumers. Now, the FCA simply says it can’t deal with this dubious enterprise (#Zeroshock if you can actually elongate “DD” into a well-known phrase or saying, incidentally.)

The big question is: Will any regulator have the guts/gumption to end this madness?

Happy birthday to the Nigerian Exchange celebrating 60 years young this week.

Elsewhere there is a bit of a language barrier problem plaguing India’s stock market. It’s the perils of lingua franca 101 – qv the European Union where they still use English despite it being a tiny minority first language post Brexit in the Euro-rump 27.

Anyway, retail issues in India, as the retail population gets to invest in larger numbers. And that means way more non-English speakers looking for regulatory news services in their dialects.

Charles Schwab, they’re heading off to China, the investment advisor is launching a branch in Shanghai.

Elsewhere, Silicon Valley’s Long-Term Stock Exchange finally listed its first two companies. Their joint listings, as I mentioned a few weeks back, are Twilio and Asana. Both of them are actually shareholders in the Long-Term Stock Exchange itself.

One other issue being raised this week by the Long-Term Stock Exchange was one of campanology. Now given how the lure of bell ringing as a unifying ambition amongst a middle-aged management cadre, I suspect the Long-Term Stock Exchange has taken a wrong turn here in deciding to ditch an opening bell for their trading sessions. But then again, they all seem a little Californian and “too cool” to actually appreciate what bourses do well.

Apparently, Singapore Stock Exchange has shrugged off the launch of Hong Kong Exchanges China A50 futures which are coming soon, they were given the regulatory all clear in Hong Kong just in the past week. Nevertheless SGX stock was off something like 6% in the wake of the HKEX China A50 futures announcement on the basis that over 50% of SGX Exchange Traded Derivatives business is in the FTSE A50 index complex.

Meanwhile, Hong Kong Exchange‘s stock was up to something like 5% on the week over the same announcement.

Elsewhere back in the Middle East, in line with the UAE Securities and Commodity Authority’s Directions and in coordination with various stakeholders, the Dubai Financial Market has extended their trading hours; the daily session will now be five hours daily as of October 3rd, 2021.

In Abu Dhabi, they’re going to have trading commissions. That’s the second cut this year.

And meanwhile the Dubai Financial Market, they’ve gone the whole hog and waived minimum trading commission’s which took place on the first of September. More news about Abu Dhabi and its exciting derivatives market coming later in this bulletin.

In South Africa, ZAR X, well they call it teething troubles. They are the first and most direct competitor to the Johannesburg Stock Exchange out of several upstart exchanges which launched during the course of 2017 in the Republic of South Africa. However, the South African regulators have lost patience.

“The Financial Sector Conduct Authority (FSCA) is vexed that ZAR X has, since 2019, not complied with aspects of the Financial Markets Act. The particular precepts that they’re non-compliant with, those are the ones where they are equivalent or at least expected to hold equivalent to at least six months of their operating expenses – that has to be set aside on their balance sheet for rainy days. Regulators do indeed put onerous requirements on exchanges because their collapse could compromise the safety of investments belonging to the public.”

It’s good to hear all the same that the other competitor exchanges launched in 2017. A2x Markets, Africa Exchange, and Equity Express Securities Exchange are not currently threatened with regulatory sanctions for insufficient capital levels.

Meanwhile, ZAR X got a month or two to manage to get their house in order and make sure that they’re suitably capitalized to go forward.

The Pre-IPO trading platform EquityZen, they’re said to be considering a sale at a mooted $700 million price tag. Nevertheless, the circumstances suggest that EquityZen is just the latest platform to run out of road in the race to find the gold at the end of the rainbow of private markets.

Riches, it needs to be added which appear to be still firmly in the grasp of the leprechauns.

Lots of talking about Robinhood their stock was down this week after the SEC Chairman was warning on payment for order flow. At the same time, the trading pioneer and boss of Interactive Brokers Corporation Thomas Peterffy brave defense of payment for order flow, it has to be said nonetheless said the SEC’s Gary Gensler will have a tough time banning PFOF.

The London Stock Exchange, they’re setting up an innovation unit in Singapore. The unit was launched by the LSEG as part of its new LSEG Labs network. The Singapore-based sustainable finance unit, supported by the Monetary Authority of Singapore (MAS) will focus on creating sustainable finance capabilities to accelerate innovation and advanced technology across the country’s FinTech ecosystem.

Back in South Africa, the Johannesburg Stock Exchange boss Leila Flourie, has been flagging the fact that capital outflows from the Republic of South Africa are a major concern to markets and the economy as a whole.

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

Pretty flat, minus 3.5% operating earnings at the New Zealand Exchange during the course of the year though it’s actually a minor tick off given the fact that they were down 10.6% in terms of capital raised in the first half of 2021, as opposed to the first half of 2020. Higher costs drove down the Nairobi Stock Exchange’s half-year profits in Kenya while the Bulgarian Stock Exchange was this week’s surprise performer of merit with their net profit rising 50% year on year in the first half of 2021. Excellent results from Sofia.

In terms of new markets this week, not quite a new market but nonetheless little diversion. The Shanghai Stock Exchange has set up a capital markets service space on Hainan Island.

The London Metals Exchange, they’re launching something very interesting, not a new market but nonetheless quite a leap forward, a digital provenance register for metals, which will be implemented over the course of the next three years.

In deals this week, it was a busy week for deals in the parish. All the deals were of course in Exchange Invest, which some might say is the newsletter no person can afford to be without in capital markets and market structure.

Singapore Exchange priced its debut US$250 million of notes with the fabulous coupon of 1.234% per annum. Five-year notes under a scheme program that was established in October 2019, but not used until now.

Over in Chicago, they’re still getting their knickers in a twist over the concept of a merger between the CME and the CBOE, despite the fact that it’s been firmly resoundingly. Resoundingly, I hasten to add once again for emphasis denied by the Chicago Mercantile Exchange group who was supposedly the bidder.

So the deal the CME says there is not a scintilla of change happening right now vexed Chicago’s media hounds, with an editorial and the Chicago Tribune saying: Keep the “Chicago” in Chicago’s Financial Exchanges.

Years ago, I recall introducing a CBOT CEO out of Burgenstock CrossFire, which I was chairing, noting that his PR department had sent to him out with one of that c.v which stressed his devotion to absolutely everything Chicago: the Chicago Pigeon fanciers club, the Chicago river appreciation society, the Chicago one-legged constitutional federation, so it those sorts of organizations.

After reading about a dozen Chicago institutions, I posted the question “ladies and gentlemen, where will globalization end?”

For some reason, this sprang back to mind when I read this Tribune editorial during the course of the past week.

One deal in the crypto space, FTX acquired the first US-approved crypto derivatives platform LedgerX. One wonders, is this an attempt to undergo a damascene conversion to regulatory status on those avoiding orange jumpsuits for many of the FTX’s American management group?

The Ocean Freight Shipping Exchange Nyshex has managed to net $15 million in its latest round. And the Hong Kong Exchanges they’ve signed an MOU with the Guangzhou Futures Exchange. They have no details about the products per se, but they’re intended to help support President Xi Jinping‘s goal of reaching peak carbon emissions by 2020.

Now ladies and gentlemen, not only can you buy and read my book “Victory or Death” – Blockchain, Cryptocurrency, and the FinTech world, but I hasten to add, if you’re looking for some feedback or an opportunity to discuss this topic, then Tuesday, September 14th, is a date for your diary at 6 PM London time. I am going to be hosting an “Ask Me Anything” as my IPO-vid Livestream returns. We can talk about “Victory or Death”, all questions are welcome on that day. And indeed if you go to our website, you’ll be able to find a speakpipe where you’ll be able to link in and actually drop your question down the pipe to be read on the show.

In crypto land, a lot of news about Binance quietly resumed the GBP withdrawal but at the same time, they discontinued support for the Norwegian Krone Pairs payments and language.

Coinbase’s rival Kraken, they’re planning their European expansion and they hope to reach an IPO by the end of the year. They’re in discussion with three regulators to secure a European licence. Apparently, Malta, Luxembourg, and Ireland are the lucky targets for Kraken to be regulated.

Elsewhere, in the same week, the FTX was buying LedgeX and they offered some emergency financing to the tune of $120 million in debt funding in order to help the hacked crypto exchange Liquid Global which had whips nasty from a series of nefarious actors just the previous week.

In product news this week, KRX aims to make South Korea’s ETF market global. There’s the possibility that we’re soon going to see a prediction market for Chinese politics, which sounds absolutely fascinating altogether. And the British Liberal Democrats are always the voice of total political illogic, certainly when it comes to anything economic, have now proposed that no new oil and gas companies be listed on the London Stock Exchange, and indeed they want to stop them even issuing bonds.

In other news, the increasingly obscure Liberal Democrats apparently lost 22.5% of their membership last year. No questions need to be asked as to why.

A fabulous article from the New York Stock Exchange this week they were talking about wildfires burning across the USA and how Intercontinental Exchanges (ICE) data has been showing how sophisticated ESG tools have become even in the welter of wildfires across summer.

Finally in product news NCDEX (National Commodity Derivatives Exchange of India), they’re going to be launching futures in Soydex in the near future.

Technology this week, scintillating news, the Abu Dhabi Exchange are entering the derivatives market with NASDAQ technology while the UK antitrust CMA fined Ion 325,000 Pounds for breaching a “hold separate” order…concerning previous acquisitions that didn’t stop Andrea Pignataro’s firm though from raising their offer for Italy’s Cerved.

And in Tunisia, they began trading on their new Euronext-sourced Optiq platform on August the 30th.

While back in India once again, NSE (National Stock Exchange) is taking steps to curb fat finger trades and unusual price movements in options.

Fabulous news this week at the apex of crowdfunding and SME stock markets, more than 650 people invested on ArawakX‘s platform over the previous two days. The first two days of their listing of two crowdfunding.

Magnificent news as ArawakX is apparently onboard in the region of 3,000 customer accounts since being regulated just a few weeks back, that comes in at not far short of 1% of the entire population of their domestic market, the Bahamas. The first two crowdfunding programs are now underway with gusto – that’s excellent news!

And by the way, yours truly PLY Patrick L. Young is an advisor to ArawakX and I’m so proud of what the Rahming family have managed to achieve with their team.

In regulation news this week, SEC’s Chief Gary Gensler has warned that the “clock is ticking” on the delisting of over 250 Chinese stocks in the USA, while he also announced an increase in research on the gamification of trading.

With regard to the latter, frankly the notion that gamification is a problem amply demonstrates that the SEC just don’t understand the technology nor appreciate the world in which they are operating.

In Cuba, caught between an economic rock and a very very hard place indeed, nobody wants to endorse the great satan the US dollar as the local Communists may deem it, so they’re instead embracing Bitcoin, extending cryptocurrency regulation in what many may presume, is a desperate move coming just weeks after the legalized small private entrepreneurial activity has first been enabled.

Career paths this week in Nepal, the CEO of the local bourse NEPSE Chandra Singh Saud, has resigned after coming under pressure following insider dealing allegations.

Meanwhile, CFOs were a hot executive topic in New York. Former MSCI CFO Linda Huber joined FactSet in the same role, while Tradeweb hired Sarah Furber from IEX who replaced her with Craig Resnick.

Of course, there was one big macro story of the week all surrounding Afghanistan and the departure therefrom various allied forces reminded us of Carl Bernstein and Bob Woodward in “All the President’s Men” noting:

“Forget the myths you’ve read about the White House, these aren’t very bright guys, and things got out of hand.”

In other news, word leaked to British media from the Beltway at the weekend, making it clear that the pigmy President Joe Biden will bear a grudge about his mental acuity from the UK Government according to various jibes in the media.

Well, I suppose we ought to be grateful that at least he can remember something.

And on that mysterious and magnificent note ladies and gentlemen.

I wish you have a great week in life and markets.

My name is Patrick L Young, this has been the Exchange Invest weekly podcast number 110.

We’ll be back next week with a number (strange enough) 111. And of course, every day don’t forget in your email box you could have this quality of pith being delivered, the Exchange Invest daily newsletter. More details at ExchangeInvest.com

Thanks for listening and have a great week in life and markets.

LINKS:

Binance Can’t Be Supervised Properly, Says UK Financial Watchdog
Reuters

UK Regulator ‘Not Capable’ Of Supervising Cryptoexchange Binance
Irish Times (FT origin)

Nigerian Exchange At 60: Ogunbanjo, Onyema Thank Stakeholders
Business Post Nigeria

The Language Barrier Plaguing India’s Stock Market
Livemint

Investment Advisor Charles Schwab To Launch Branch In Shanghai
SHINE

Silicon Valley’s Long-Term Stock Exchange Finally Lists Its First Companies
Fortune

Why This Brand-New Stock Exchange Ditched An Opening Bell
Fast Company

Singapore Bourse Sees Little Impact From HKEX’s China Futures Launch
Reuters

In Line With UAE Securities And Commodities Authority’s Directions And In Coordination With Various Stakeholders: Dubai Financial Market Extends Trading Hours To Five Hours Daily As Of 3 October 2021
DFM

Abu Dhabi Bourse To Halve Trading Commissions, Second Cut This Year
Reuters