114 Exchange Invest Weekly Podcast October 2nd, 2022

Transcript:

This week in the parish of bourses and market structure:

IEX targets “Reddit Retail”, Beijing Stock Exchange already testing their SME platform, while we await the possibility of a China Crackdown. Meanwhile, the FCA says “No Time to Die for Libor”.

My name is Patrick L. Young, welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast, Episode 114.

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.

In the past week, demonstrators briefly occupied the Sao Paolo Stock Exchange in Brazil to protest inequality.

Meanwhile, with an eye to inequality of a slightly different kind. The IEX Exchange has assembled an advisory committee on retail trading. IEX Exchange, the flash boys are aiming to draw in more business from retail investors. And in the process, they’re set to convene regular meetings of some of the biggest brokerages in an effort to enhance equity trading for retail investors that some critics have described as impaired. It’s a fascinating move as IEX seeks to bring more “Reddit retail” flow to the ‘Flash Boys’ bourse.

Meanwhile, Deutsche Boerse, EUREX Global Head of fixed income derivatives Philip Simons said this week, “It’s not a question of if liquidity moves, but a question of by how much and when” when it comes to the fact that he deems the relocation of Euro clearing from London is inevitable.

Frankly, it’s always sad to see somebody dropped their common sense in favor of a paycheck. At the same panel, it was noticeable that the boss of the London clearing house was saying there has been no appreciable movement in Euro clearing. See podcasts passim, articles on CapX by PLY, that’s me. And indeed, many many issues of the Exchange Invest newsletter for why Philip Simon is wrong.

Elsewhere, Banks and Asset managers they’re backing a plan for an explosion in the UK share trading. Top banks and asset managers have thrown their weight behind the proposals in Britain to scrap curbs on share trading. Interesting to see how that develops because in many ways it could be a rather anti-exchange and pro internalization profile.

One exciting development in terms of new offices this week, ArawakX, that’s the startup SME-focused crowdfunding and exchange platform in the Bahamas. They’ve opened an office in Silicon Valley, California no less. That’s going to be an excellent opportunity to introduce the ArawakX platform, as well as the Bahamas and the Caribbean to potential US-based investors. Excellent news all around from ArawakX, an exchange which PLY (that’s me) is proud to advise.

Over in India, could it be finally that an NSE’s IPO is coming? Bourse depository stocks rallied heavily during the course of the last week. As we heard once again, this seemingly never-ending rumor: the National Stock Exchange of India IPO process will be approved. Someday that rumor may prove correct.

In the meantime, it’s interesting to note that CDSL, the settlement agency is up 100% in the past six months alone, while the Bombay Stock Exchange (BSE) is up 120%. What would the valuation be right now if the NSE India, the much larger stock trading platform in the Indian market.

Elsewhere, a little bit of pain for Interactive Brokers, they’ve been fined $1.75 million dollars for lapses when the oil price went negative. In fact, they’ve ended up making in total something like a concession of over $84 million. That includes client restitution. It remains rather remarkable that so many parties have been fined concerning the Cushing crisis yet the exchange responsible for the West Texas Intermediate futures contract failure when they went negative, escaped any major official censure penalty.

Centre of a sort but no real penalty, the ASX they’re considering all recommendations in the Reserve Bank of Australia, that’s the central bank’s Financial Stability Standards Report.

It’s a slightly milquetoast statement that came out from ASX during the course of the last week where the Central Bank of Australia had clear causes for concern in what currently happens, let alone how the future might pan out when the new CSD system is finally operational at the self-styled ‘technology company’ which holds a monopolistic position in Australia’s financial infrastructure.

Meanwhile, the Bombay High Court was hearing an interim application filed by La Fin, which had sought orders against the MCX (Multi Commodity Exchange) on the grounds that the Exchange exceeded the 120-day deadline for filing a written statement in response to a ‘commercial suit’ that had been instituted under the ‘Commercial Courts Act’. The Bombay High Court, being highly unamused, promptly imposed a cost of 25,000 rupees on the private firm that had filed the suit.

Elsewhere, news coming on October 1st, Xav-SPAC the world quantum growth acquisition Corp has announced that the separate trading of its class A ordinary shares and warrants will be taking place from October 1st under the ticker symbol WQGA and derivatives thereof.

One out of major results this week, IHS Markit, their Q3 adjusted earnings beat estimates, surely this must be the last time we see IHS Markit reporting as an independent company, as of course they have been swallowed up by S&P Global but the paperwork continues to finalize the deal.

Some more excitement in new markets, carbon markets are all the rage in Asia. Last month, China launched theirs, this week Singapore announced the plan to develop a carbon credit trading marketplace. That announcement was soon followed by Thailand.

Meanwhile, if you’re looking for something to read during these exciting times of, well, lockdown for many still but post lockdown for a lot more people as well. Of course, the art of commuting can involved say reading a book ladies and gentlemen, what better tome to turn to than my latest “Victory or Death” – Blockchain, Cryptocurrency, and the FinTech world. It’s available from Amazon.com and all leading retailers distributed by Ingram worldwide and published by DV books.

In crypto land this week, only 10 Korean crypto exchanges have made the registration deadline for the necessarily AML KYC processes that Korean regulators had demanded some months ago.

Elsewhere Coinbase, they’re going to let you deposit part of your paycheck into your Coinbase account.

Meanwhile, Binance the noose continues around its decentralized neck. They’ve stopped Singapore users from buying or trading crypto on the main platform.

Exciting news in products, it may have been a slightly weaker Q3 across the world but we’re looking forward to a very exciting Q4 possibility of an explosion of listings in Moscow Exchange and indeed the Saudi Exchange Tadawul they reckon they’re going to end 2021 with over 30 new listings according to the regulator.

Elsewhere, a curious case of compulsion in the week when we sold the new James Bond film coming to cinemas around the world, “It was no time to die for Libor”. The UK Financial Conduct Authority has announced that they will compel the ICE Benchmark administration to publish one, three, and six months Sterling and Japanese yen ‘synthetic’ Libor. Oh deep joy, after making it absolutely clear that the end of Libor is totally finally the conclusion of the calendar year 2021. Now the FCA is demanding that the ICE Benchmark administration keep calculating ‘synthetic’ Libor even after the point where according to the blob’s own demands, this rate is a dead parrot.

Moreover, given the fact that there was so much controversy over the calculation of Libor in the first place. How on earth can we argue that a synthetic Libor is really a perfect solution? So the FCA has issued a blistering edict demanding ICE benchmark administration keeps calculating Libor even after definitively dismissing the notion Libor was anything but dead after December 31, 2021. Of course, this FCA edict compulsion no less is couched as a temporary provision, you know, like British motorway speed limits, which were introduced temporarily in 1965 or indeed, income tax, which seems to have survived almost 300 years in the United Kingdom since its temporary introduction.

MarketAxess (MKTX), they’re offering global investors access to the CIBM. There’s your new acronym of the week, ladies and gentlemen, the China Interbank Bond Market courtesy of the Southbound Connect service through the Hong Kong Exchange exciting times in the bond market.

Elsewhere the National Stock Exchange of India, they have confirmed they’re doing away with a stop loss market orders in the options segment. The facility will, however, continue for future.

In technology, yes, it was shocking, wasn’t it? I mean, it was only Thursday, September 2nd that President Xi announced there would be a Beijing stock Exchange for SMEs, but the Beijing Stock Exchange itself has already completed what it claims were rather comprehensive user tests over the last weekend.

Elsewhere Marketnode, an SGX, and Temasek Digital Asset Venture have announced their partners ahead of key product launches. Marketnode is getting into bed with a series of banks Barclays, BNP Paribas, BNY Mellon, Citi, Deutsche Bank, HSBC, Orient Securities International, Standard Chartered, Societe Generale, and UOB Most exciting and perhaps for the parish, they are going to be relying in whole on or part on technology from the blockchain settlement specialists SETL to deliver various systems to the enterprise.

Over in Hong Kong, they’ve launched the Orion Central Gateway, that’s a system fully integrated with the Hong Kong Exchanges securities trading system, offering improved performance and reduced latency compared with the vendor-supplied platform that it replaced.

Archax, that’s a UK-regulated MTF for the digital asset world which is yet to launch trading despite having been regulated since August of 2020. They’ve announced the launch of Montis Digital with the aim of launching a digitally native blockchain-based digital (but blockchain agnostic) post-trade infrastructure.

In crowdfunding news this week, Seedrs has narrowed their losses as fundraising continues to grow. But frankly, I find it shocking Seedrs is still losing money, did they lost 4.33 million pounds in the last year despite this epic COVID bull market.

Regulation this week, a simple prognosis from Gary Gensler, the Chairman of the SEC crypto products offering returns cannot avoid regulation.

Elsewhere, Robinhood’s CEO Vladimir Tenev said that the SEC regulatory push is about ‘control’ not investor protection.

Good grief! Next of all, people could start accusing Gary Gensler of control freak aspirations. Where on Earth would things go if stories like that began to spiral unchecked?

Speaking of Gary Gensler, he’s getting the band together again headline news in career paths this week, CFTC Commissioner Dan Berkovitz is swapping over to the SEC to become General Counsel with John Coates leaving the SEC.

That’s a fascinating move as Gary Gensler reforms the CFTC banned over on the two-dimensional trading side of securities regulation prior to being a commissioner, of course, Dan Berkovitz was Gary Gensler’s CFTC General Counsel from 2009 to 2013.

Elsewhere Sir Donald Brydon, the former chairman of the London Stock Exchange Group, which is a shareholder in the primary bid, it’s been announced that the new chairman of the primary bid will be none other than indeed sir Donald Brydon.

Further to the news that we gave you earlier about Montis the division of Archax that’s looking at the clearing and settlement provision (subject to regulation), the former EY, Atos Euronext, and Euroclear industry veteran Martin Watkins indeed the parishes leading eminence grise in the Exchange Invest 1000 index has been appointed as Montis’s Digital CEO. Congratulations to Martin!

In big world this week, well interesting to go to the hill and see that President Joe Biden has tapped a big bank skeptic to become the new controller of the Currency, none other than Cornell law professors Saule T. Omarova. Call it some mysterious force in the ether, if you will, but Joe Brezhnev’s latest blob pick (and boy is his blob a soggy morass of paper qualified, but wisdom light blobsters) See also the defense establishment and Afghanistan.

Another professor is being appointed this time to head up the Office of the Controller of the Currency. It seems somewhat quixotic to choose somebody who doesn’t seem to even like the notion of the banks they’re invited to work with. When old Brezh-o appoints a vegan to run the cattle ranchers regulatory body will know his command and control moves are complete, it surely can’t be far away now.

Elsewhere, that elastic trickery thingie, which is at the epicentre of powering almost everything, including even many cars nowadays is in short supply. It’s hard to point to one single point across the globe which has provoked the latest energy crisis, but there are issues seemingly almost everywhere in the People’s Republic of China, fingers have pointed to coal prices as one factor. Over half of the 31 mainland provincial jurisdictions are now rationing power, leading to some irritation amongst the populace, and indeed, a great deal of panic amongst Chinese SMEs.

Meanwhile, UK media managed to whip up a storm which provoked a petrol shortage this week, which I noted previously in Exchange Invest this week is an ideal test run of how things will look from the mud huts of the home counties once Boris Johnson’s green agenda really kicks in.

Ahead of winter, Europe has acute issues – the Russians aren’t sending sufficient gas to replenish European supplies, and the useless Mrs. Merkel, who still remains as caretaker Chancellor in Germany, thanks to an inconclusive election result. Mrs. Merkel has ceded energy security through a series of her bizarre decisions (closing nuclear plants, snubbing Ukraine in favour of Russian pipelines, etc, etc). The EU has plus ca change failed to think ahead of course. There has been a clear failure of that textbook oxymoron “government thinking” in the energy division. Things may become chillier before they get better this winter.

And on that mysterious and magnificent note, ladies and gentlemen, this is myself Patrick L. Young, the publisher of Exchange Invest, the Executive Director of Valereum Blockchain, bringing the bridge to financial market assets in the digital and non-digital world.

Wishing you all a great week in blockchain, life, and markets.

LINKS:

Demonstrators Briefly Occupy Sao Paulo Stock Exchange To Protest Inequality
Yahoo News

IEX Exchange Assembles Advisory Committee On Retail Trading
IEX

‘Flash Boys’ Exchange IEX Ramps Up Effort To Cater To Reddit Retail Crowd, Forms Broker Committee To Improve Stock-Market Structure
MarketWatch

Deutsche Boerse Says Relocation Of Euro Clearing From London Inevitable
Reuters

Banks, Asset Managers Back Plan For “Explosion” In UK Share Trading
Nasdaq

NEW HEIGHTS: ArawakX Opens Office In Silicon Valley
EyeWitness News

Bourse, Depository Stocks Rally Amid Talk Of Nod For NSE’s IPO
Economic Times

Interactive Brokers Fined $1.75 Million For Lapses When Oil Fell
Bloomberg

Interactive Brokers Pays $84m Over Platform Failure During Oil Crash
FinanceFeeds

ASX To Consider All Recommendations In RBA Financial Stability Standards Report
ASX