121 Exchange Invest Weekly Podcast November 20th, 2021

Transcript:

This week in the parish of bourses and market structure:

European Union sees Sense over CCP.

No pulling up the Euro clearing drawbridge for some time to come.

Analysts demonstrate their net lack of ability over TP ICAP while Beijing Stock Exchange launches with a billion-dollar debut day and CBOE they’re tweaking their global equity strategy with the addition of Aequitas / Neo in Canada – another good niche purchase.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 121.

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.

TP ICAP Group has received a consensus recommendation of “buy” from analysts. That is of course after a year where the stock price has assiduously worked its way into the toilet, surpassing even the rights issue price of 1.40 admittedly to the Southside, as this podcast was being recorded. If ever there was proof needed of the paucity of analytical ability, this is it.

True a big issue is the way actual ratings are as insightful as male calibrated prophylactic sizing and the absence of a “FLEE” rating has I feel long amounted to a hole in the analysts’ armoury.

In other TP ICAP news, various insiders have been buying fairly trivial amounts of stock. Mark Hemsley has already seen his 22,000 pound purchase on September 8th erode over 15% for example. Along with other purchases, it seems like a case of the rats not so much abandoning the sinking ship as flinging a bit of change into the kitty in the hope people think they believe in the mission. On the other hand, one could also think about it this way – 22,000 pounds that’s the sort of thing a major league toilet broker expects to pay for lunch with a few of his key clients.

Dubai IPO Gambit pushing a lot more content towards the markets has had a huge result for Dubai financial market. In just one month the relatively thinly traded stock has nonetheless doubled in value to $4.6 billion.

The National Stock Exchange of India could it be that finally their big-ticket IPO is set to get clearance from SEBI. That’s at 2 lakh crore in Indian rupees, which in real money is $27 Billion that would vault NSE towards the top of Tier 2 in Young’s Pyramid of Exchanges, which is quite a bit of a head of our last valuation for the company. Nonetheless, institutional investors uncertain about the listing possibility actually taking place as has indeed been the sad tale of the past decade are currently trimming their stakes in NSE in the private market.

Getting the balance right on UK Euro clearing may take years. A European official said this week. At least the ‘not pulling up the drawbridge rapidly’ remark makes sense and shows an element of maturity often lacking in the EU’s recently often churlish approach to Brexit.

On a cheerier piece of news in the European Union, the European issuers FESE SME awards were a great success in Porterage Slovenia this week, as a centerpiece of SME Week. Congratulations to all the exchanges, and particularly the SMEs winning the coveted prizes. To it, the companies were: Pexip, FOM technologies, Nanoform, Aluflexpack, and Enlight Research listed respectively on Euronext NASDAQ, NASDAQ again, the Swiss Exchange SIX, and the Baltic Exchange.

Finally, this week in the top stories – the government of Indonesia has asked the Indonesian Stock Exchange to handle domestic carbon trading.

It was a big week for results in the parish, all the details were in Exchange Invest this week. For more subscription details contact us via social media or indeed at ExchangeInvest.com.

Bombay Stock Exchange had a great Q2, overall they saw consolidated net profit rising 36.8% while operational revenue was up 50.4%. Similarly, net profit up 43.7% in Manila at the Philippine Stock Exchange and the OTC Markets Group saw gross revenues for the third quarter of 2021 up 42% year on year with operating income exploding up to 77%.

It was equally a busy week in new markets for the parish, all the information was once again 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, here are some edited highlights.

NASDAQ has received a Nordic power spot market licence, no date set yet for the launch. And the big new market of the week was of course the Beijing Stock Exchange the SME-focus platform, which was only announced a few months back by President Xi, it hit $1.5 billion in turnover on its first trading day.

In deals – lots happening in the parish again all the news were in Exchange Invest daily. CMC, the mega broker, they’re looking at splitting into two separate companies. Quite a vogue this week, people looking at stock splits. I wonder when it’ll happen to the government, it just seems to get even bigger and even less efficient. No news on splitting that. CMC they’re looking at splitting into possibly a leveraged and non-leveraged pair.

The NZX has confirmed an agreement to acquire (through its wholly-owned subsidiary Smartshares) the management rights loss of the ASB Superannuation Master Trust.

Russia’s St. Petersburg Exchange, the IPO books are covered and we were hearing the news by the end of the week, that people needed to look at improving their bids if they were going to get a “fill” as the St. Petersburg bourse comes to market in an attempt to raise $150 million.

S&P Global and IHS Markit, well, it’s getting closer. Conditional clearance from the US Department of Justice, which is actually in line with the divestitures that are already going on, namely, IHS Markit’s Oil Price Information Service (OPIS), Coal, Metals, and Mining (CMM), and PetroChemical Wire (PCW) businesses. Those are all currently on the block to be sold to News Corp, subject to a final agreement. At the same time, the S&P Global organization has announced the commencement of exchange offers and consent solicitations for the IHS Markit notes as the deal steps closer, but the UK is still putting a slight spook into the works, asking for a slight delay while certain things are clarified.

And that leaves us with this week’s deal of the week: CBOE Global Markets – they’ve agreed to acquire Aequitas NEO, strengthening their global equities offering. Doubling up the number of platforms they hold in Canada. It’ll be interesting to see well CBOE does their paperwork better than TMX? Or can we expect Jos Schmidt, the serial entrepreneurial founder of NEO to work on Alpha Mark 3 in about of fortnight? Presumably, Alpha Mark 3 by the way will be “Gamma”.

Seriously CBOE have done another good deal. Albeit I’m not 100% clear on what it adds to MatchNow. Presumably at scale and slightly different market segmentation, along with Jos Schmitt-inspired technology. Then again, like all people with a life, the North American stock market political economy remains so pointlessly complex as to disincentivize endeavoring to comprehend it. In this respect, I remain a simple multi-dimensional derivatives kind of guy. Twisting the binary to the point of making it ‘50 Shades of complexity’ has never exactly turned me on.

Don’t forget ladies and gentlemen, if you’re looking to understand some of the backdrop to what’s going on in the future. “Victory or Death” – Blockchain, Cryptocurrency, and the FinTech world. My latest tome is still in bookshops. It’s a binary world. Your career will sustain or collapse in the next stage of this digital revolution, hence the title “Victory or Death”. Lest you need reminding of the exciting times and the very, very binary possibilities for finance and your career in which we’re living. “Victory or Death” is published by DV Books and distributed by Ingram worldwide.

While you’re waiting for your copy of “Victory or Death” to arrive, check out our Livestream Tuesdays at 6 pm London, 1300 New York time. it’s the IPO-Video live show. Catch the back episodes on LinkedIn and YouTube via IPO-Vid. Coming this week, we’ve got the view from the carbon markets and COP26 Steve Zwick, an accomplished former futures broker futures trader with a lengthy career in Chicago who turned eco journalist a number of years ago. We’ll be discussing what’s happening in these markets in the aftermath of COP26 in Glasgow last month.

In crypto land – Coinbase has been hit with a class action suit over the number of accounts that were hacked and up to 50 as yet unnamed executives are included in what amounts to a #Zeroshock litigation as predicted in Exchange Invest the moment the hacks were discovered.

Elsewhere Coinbase is pushing for a single crypto regulator in the USA. “We have to deal with 53 regulators in just the United States of America” states an exasperated CEO and co-founder Brian Armstrong.

Elsewhere Binance – they’ve come out rather shamelessly and published a “10 Fundamental Rights” for crypto users, a carefully worded balancing act pushing for innovation in the face of faster rising regulation, or so at least goes the boilerplate of hype that was widespread amongst the media during the course of this week. The problem is, of course, that this is the company who absolutely refused to have anything to do with regulation until just a couple of months ago, and indeed haven’t even yet managed as far as we’re aware to publish a firm home address for the headquarters of their business, but nonetheless, CZ says regulation is required and the media are doing a great deal of work to try and whitewash their past legacy of regulatory avoidance. We shall see how this plays out. I suspect it could still be orange jumpsuit, time for some.

Product news this week – in the wake of a cup, we were still getting lots of ESG announcements. ICE (Intercontinental Exchange), they’ve expanded its ESG data offering to 2 million fixed income securities. Meanwhile, NASDAQ expanded their European ESG derivatives offering with options on a key ESG index. And SPAC Special Purpose Acquisition Companies could now be listed and traded in Switzerland.

Technology news this week, it’s difficult to know whether this lies on the laugh/cry binary scale but MEMX (Members Exchange) in other words, the members being the major league banks in the United States of America have asked the SEC to reject the what they call ‘deeply flawed’ proposed changes to US equities data fees. Certainly it’s a case of one or the other on the laugh/cry binary scale. While the banks pull the strings from MEMX in every sense. MEMX are shrieking ‘conflict of interest’ which some might argue are the very words banks have often live by when they seek to manipulate the market structure to reflect what they want, as opposed to a broader market solution.

In Pakistan, the aftermath rumbles on of the shambles surrounding the Pakistan Stock Exchange‘s implementation of the Shenzhen Stock Exchange’s technology. The Pakistan Stock Brokers Association has asked the Pakistan Stock Exchange Chairman Dr. Shamshad Akhtar to investigate the premature implementation of the new trading system by the management of PSX, which inflicted heavy losses on investors and a huge dent in the credibility of the Pakistan Stock Exchange.

Meanwhile, it was all bad news last week, MSCI has confirmed that Pakistan has been downgraded to a frontier index. HCL the Indian technology vendor, they’ve bagged a multi-year deal from a Europeclear group which was headlined in the Indian Business Standard: HCL Technologies to Embrace Euroclear Digital Landscape.

Now there’s a phrase ladies and gentlemen, am I alone in seeing visions of the Moon’s less scenic fringes when I think of Euroclear digital landscape, with lots of Belgians running around trying to look busy in space suits borrowed from Tintin’s historic lunar landing?

Speaking of delayed stuff symphony, ASX’s Distributed Ledger Technology as a service programme is now production-ready. Better late than never.

In data news, great stuff from BMLL – they’re delivering a level 3 futures data from across three major global exchanges in one harmonised format. Another day, another few petabytes of data dropped into the BMLL lake complete with an impeccable taxonomy.

Quite a lot of happening in crowdfunding as well. Crowdfunding is expanding across Europe, after the EU gives the crowdfunding a green light and indeed Crowdcube – one of the first companies to take advantage of that move expanding across the EU 27 from its Brexit Britain headquarters, having gained a Pan European and UK regulatory approval.

Elsewhere, the Seedrs chief executive Jeff Kelisky has highlighted peer-to-peer lending as a key growth area and urged the government to do more to support fintech.

One death in the exchange Paris this week, the Delaware Board of Trade, it’s finally gone under its ‘new’ owner Ideanomics, who took control of the flailing venture some months ago, it is being reborn as a crowdfunding platform entitled Justly.

In regulation news, Britain is proposing global competitiveness as an objective for financial regulators. Certainly smart regulation would be a lot better than just too much regulation. The US is looking at reform of bond trading, that one’s gonna run and run and run. And the Austrian court has supported the European Union’s criticism of their takeover commission, a somewhat seismic view altogether. Slight kerfuffle in Hong Kong, the new Chinese cyber security review process will also apply to some Hong Kong IPO’s.

And that leaves us to consider ‘big world’ ladies and gentlemen, ‘Singles Day’ took place this week and Alibaba inspired phenomenon that has been going on, on the 11th of November in China for a series of years now at the same time, while the last 12 years have been marked by ‘Singles Day’ in China, the rest of the world is of course, marking Armistice Day after the First and Second World Wars. Nonetheless, the armistice this year in terms of spending was quite apparent. Alibaba reported that gross merchandise value for this year’s ‘Single Day’ grew to a record 540.3 billion yuan, which is at $84.5 billion during the 11 Day campaign. However, growth was only and I say only markedly because this is of course China and Asia were benchmarking against only 8.45% year on year. The first single-digit GMV growth since Alibaba created ‘Singles Day’ in 2009. Then again, the Chinese economy didn’t even manage to grow 5% in the course of the last quarter, which is a pretty catastrophically low number, if you’re benchmarking Chinese growth. I suppose you could read that and weep if you’re in Europe. And certainly, when you look at Trafigura’s comment this week, their warning of power outages in Europe this winter, because Europe is at risk of insufficient gas reserves. Thanks to its reliance on some rather dubious pipeline assets.

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, publisher of Exchange Invest, Executive Director at Valereum Blockchain.

I wish you a great week in blockchain, life, and markets. Stay tuned for Episode 122 next week.

LINKS:

TP ICAP Group PLC (LON:TCAP) Receives Consensus Recommendation Of “Buy” From Analysts
MarketBeat

Dubai’s IPO Gambit Adds $2.3 Billion To Bourse Operator’s Value
Bloomberg

NSE’s Big-Ticket IPO Set To Get Clearance From SEBI
The Hindu Business Line

Institutional Investors Trim Stake In NSE On Listing Uncertainties
The Economic Times

Getting Balance Right On UK Euro Clearing May Take Years, Says EU Official
Reuters

Winners Of The European Small And Mid-Cap Awards 2021
FESE

Govt Asks IDX To Handle Domestic Carbon Trading
The Jakarta Post

BSE Spurts After Q2 PAT Rises 36% YoY To Rs 63 CR
Business Standard

PSE Net Profit Rises 43.7% On Pandemic Capital Raising
Manila Bulletin

PSE Income Up 43%
BusinessMirror