124 Exchange Invest Weekly Podcast December 11th, 2021

Transcripts:

This week in the parish of bourses and market structure:

T + 1, not yet even “Coming Soon”.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 124.

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 many events of the course of the last seven days and those happenings and analysis thereof 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.

So, a vast array of acronyms, SIFMA, ICI and DTCC have laid out the path to shorten the US Securities Settlement Cycle. In other words, we’re looking at T+1 within T+943 days.

In new markets this week, it was a busy week for new markets in the parish. All the information was 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 one edited highlight.

NG Clearing is set to launch and indeed has launched by the time we listen to this podcast on December 9th. The launch of NG Clearing proceeds the trading of the first exchange-traded derivatives in the Nigerian Capital market. Exciting times in Abuja.

In deal news this week: IG Group is selling two of their trading platforms in the United States of America, Nadex and Small Exchange for $216 million to Crypto.com.

The Bahrain bourse is planning to list their Bahrain Exchange next year.

Coinbase has acquired the Wallet Firm BRD and also bought Unbound Security in Israel.

Fascinatingly, the London Stock Exchange Group despite currently suffering indigestion from its acquisition of Refinitiv, paid $340 million this week to acquire Quantile Group at an exotic multiple for the business chaired by a recently retired member of the Board of LSEG itself.

Elsewhere, the EBRD they’re considering increasing their equity stake or at least buying more shares as the Zagreb Stock Exchange goes through a capital raising leaving the EBRD probably holding still around about 5% in the Croatian bourse.

Don’t forget ladies and gentlemen use and still pick up a copy of “Victory or Death” – Blockchain, Cryptocurrency and FinTech world. Something you can read during what looks like could be a new Christmas lockdown, let’s hope not as Omicron turns out to be a bit of a bust. But anyway, if you’re looking for some reading this Christmas, “Victory or Death is published by DV Books and is distributed by Ingram worldwide.

While you’re waiting for your copy of “Victory or Death” to arrive, check out our Livestream. This week we had an epic discussion. All about technology with Taraneh Derayati, a new source of the low code, arguably even no code will certainly a very, very differently coded environment for financial market infrastructure with the CEO of Vermiculus Technology. You can catch the next live edition where we’re going to have serial exchange entrepreneur Jos Schmitt of Aequitas. That’s coming out Tuesday at 6 pm London, 1 pm New York time. The IPO-Vid live show is live on Facebook, YouTube and LinkedIn. You can get some back episodes on all of those channels, for example via YouTube at IPO-Vid.

In crypto land: the Norwegian Block Exchange is going to become the first Nordic crypto platform to list on Euronext.

Singapore suspended a crypto exchange came a bit as a result of an intriguing Spat where it appears that they have listed a token related to a K-Pop banned which did not have their authorization. BTS has broken back and complained rather vociferously to the point where the Singaporean authorities have actually closed the exchange down.

Binance – they’re working to set up a UK arm after withdrawing it seems a regulatory application in the city-state of Singapore. They’re hiring in the UK and apparently planning to seek FCA approval for a launch. That’s just months after the UK Financial Conduct Authority said Binance should not be operating in the country. Will the FCA see past finances past actions as disingenuous? Or will they perceive a Damascene conversion to regulated probity?

One sad piece of news this week: the troubled Australian Exchange, My CryptoWallet has bitten the dust after a barrage of complaints. Taking with it alas, a considerable amount of customer money.

Sir Paul Marshall – he issued a creed occur this week ahead of the London listings review. He reckoned London was in a bad place for listing. His opinion piece in the Financial Times was headlined that London is becoming the Jurassic Park of Stock Exchanges. Brutal stuff.

Indeed for all the innovation by Aquis, CBOE and LSE (the latter especially in secondary markets), there’s more than a whiff of imperial decay surrounding the LSEG, not helped by their big deal obsession, which has left the CEO Out of his Depth Dave, and the group he nominally oversees, exposed. That said that there’s a big blob bereft of vision issued to the UK. After 11 years of Conservative by name producing socialism by nature via “Hey Big Spender” government. Britain is at an impasse. An inflection point would be welcome but that means an outbreak of government which appears unlikely.

A very interesting piece of news this week: Kin and Carta PLC, became the first B Corp certified business listed on the London Stock Exchange.

Elsewhere there was a listing review. Finally, this week the FCA confirmed the new listing rules to boost growth and innovation on UK stock markets. Various things have gone up but one thing that’s gone down is the free float from 25% to 10%. With the dual-class share revolution surely now complete back on the agenda essentially everywhere worldwide.

China’s FX Regulatory body they’re forming a yuan futures trading pilot which looks interesting. And ICE this week, published contract rules and procedures and Crude Oil quality specifications for their exciting new Midland WTI American Gulf Coast futures contract. That’s fascinating, it’s in some ways a rebranding of their Permian WTI futures contract. But effectively, it ends up becoming the mega-contract we first discussed as a fascinating new divergence away from the narrowly focused and flawed CME Cushing WTI in Exchange Invest issue 2082 earlier this year, when Continental Resources and Magellan have come together to create a unified basis via ICE for a futures contract. That contract benefits from what I noted at the time in Exchange Invest is mega storage plus waterborne access. And to quote what I said at that time in issue 2082 of Exchange Invest:

“For landlocked Cushing has about 90 million barrels (according to CME data) of capacity. Houston has 60 million barrels in Magellan and ECHO storage terminals alone…n the local area it’s more like 150 million barrels. Try a storage squeeze there and see how it works out – it won’t be another April 20, 2020, especially not as the broader Gulf region around Houston has some 492 million barrels of storage capacity!”

“Moreover, and this is surely THE killer part of the jigsaw puzzle: Houston has access to water. Our woman with the eyeglass poring over Google Earth says it amounts to 14 piers worth of oil access. That’s a massive amount of dock optionality…and as we know with waterborne Brent, it’s a key modality in high volume benchmarks.”

Those points are as valid today as they were six months ago.

Meanwhile, in the curious twist, BP said that Brent’s benchmark reform should include US Oil and see a significant reduction in the usage of Brent, which seems surely rather counterintuitive, given the name of the Brent futures contract.

Technology news this week, one highlight: SETL demonstrating 1 million transactions a second on their proprietary blockchain. That was for a banking transaction out there looking to try and move into the banking business for the settlement of transactions therein.

In crowdfunding, big news: Seedrs to be acquired by Republic of the USA to create the world’s first global private investment platform. The US platform Republic is paying $100 million and of course that came after the rather bitter ramifications when the UK anti-trust blocked the Crowdcube merger with Seedrs because of monopoly concerns.

Elsewhere, a controversial, another piece of news: Zopa have pulled out of Peer-to-Peer consumer lending, as they blame cowboy firms for ‘Damaging Consumer Trust’.

In regulation news this week, well purchase everywhere in China former Shanghai bourse official Cao Jian, the ex-deputy head of the IPO review center of Shanghai Stock Exchange’s STAR market has been accused of accepting gifts and trading stocks using other people’s accounts. Promptly facing corruption charges, allegedly $30 million in cash were found in his home.

It rather reminds me of that well, I’ll save the agency’s blushes time when they ‘reviewed’ their listing practices after the moment, one of their regulators was given the prospectus in a lap dancing establishment and promptly produced the stamp of approval from his pocket to duly endorse the listing in the small hours of the night.

Elsewhere, Xi Jinping has also been purging the capital market and is investigating amongst others, one of the former commissioners of the CSRC ( Chinese Regulator). The story and more, of course, were covered in full detail in Exchange Invest this week.

SEBI (the Indian regulator) – they’re proposing a ‘One Commodity One Exchange’ Policy after various utterances of SEBI appearing to be a rather more free market in recent months. Unfortunately here we see something which minds to pure intervention. The ongoing delusion remains at the heart of Sebi’s central planner’s mindset: that a continental-size nation such as India will have just one benchmark, despite a remarkable cornucopia of regional differences.

Elsewhere Britain’s financial watchdog – they’re proposing a ‘reset’ in consumer protection. The FCA wants to reset by putting the onus on firms to prove good outcomes for customers, after a string of mis-selling scandals going back decades in the UK.

It’s a potentially messy outcome where the regulator tries to shut doors with already bolted horses way far across the moors and avoid blame at all costs. Frankly, placing more onus on consumers in the modern age. The modern digital age I hasten to add to do your own research would not be misplaced. But then again, British consumers appear to want to be mollycoddled and the blobs too gutless to make them more responsible. Thus victimhood for the middle classes is enshrined in financial regulation, typically incoherent governmental approach.

Career news this week: the highlight of the week arguably the new New York Stock Exchange President is Lynn Martin bringing an awesome tech background, derivatives background and much more to the big board. That was part of a huge set of senior management changes within the Intercontinental Exchange. Lynn Martin stepping up to run the NYSE. Of course, she was a fabulous IPO-vid guest a few months back, I sponge “Growing the Portfolio Trade” was the topic of discussion there. You can catch that in our archive at Youtube.Com (IPO-Vid). Lynn exemplifies the strong correlation between career advancement and corporate expansion – that is she’s a reader of Exchange Invest. Plaudits to all those promoted in the ICE reshuffle highlights included not just at high five amongst our office. Moment as the brilliant Lynn Martin took over from Stacey Cunningham, who’s going to remain an NYSE Director, but also former CFTC Commissioner on the ICE/NYSE Board Member Sharon Bowen is going to become Chairman of the big board replacing Jeff Sprecher himself.

Moreover, there’s been some exciting movements in our Mark Wassersug, the ICE Chief Operating Officer is going to transform to Chief Information Officer working closely with Mayur Kapani, the Chief Technology Officer of ICE while Stuart Williams will be stepping up to the plate as Chief Operating Officer of ICE, reporting to the ICE President Ben Jackson. Stuart is going to be remaining in place as president of ICE Futures Europe “until a successor is identified and in place”. Delighted to see Trabue Bland currently president of ICE Futures Europe will be stepping up to oversee all of ICE’s futures exchanges.

That’s just a flavor of the many things that have been happening within the series of fascinating moves in the ICE group. And it’s a delight to see the likes of Stuart Williams, Travie Bland and Chris Edmonds to name but three, all adding to their already stellar career paths. And of course, that highlights the addition of a dynamic and wonderful new President of the New York Stock Exchange in Lynn Martin.

And that brings us to ‘Big World’ ladies and gentlemen. Headline this week in Fortune Magazine: Nearly two-thirds of Gen Z think they’ll become crypto millionaires. In other signs, this could be a bull market approaching the peak of an economic cycle, miniskirts are big in fashion news as a result of miniskirts being very, very short indeed.

Is hemline theory in the age of crypto still relevant?

And on that mysterious and magnificent note ladies and gentlemen. My name is Patrick L. Young, publisher of the Exchange Invest daily newsletter and Executive Director at Valereum, a blockchain company. I wish you a great week in blockchain, life and markets.

LINKS:

SIFMA, ICI And DTCC Lay Out Path To Shorten US Securities Settlement Cycle
DTCC

NG Clearing Sets To Launch As West Africa’s First Central Counterpart
Vanguard News

Excitement As NG Clearing Sets To Launch December 9
Business Post Nigeria

IG Group To Sell Two Trading Platforms For $216 M
Reuters

IG Group To Sell Nadex And Small Exchange For $216M
FX News Group

Crypto.com To Acquire Two US Exchanges For Derivatives And Futures Offerings
Cointelegraph

Coinbase Acquires Crypto Wallet Firm BRD For Undisclosed Amount
CoinDesk

Coinbase Buys Unbound Security, Marking Its Presence in Israel
Bloomberg

LSEG To Acquire Quantile Group Limited
LSEG

The EBRD Is Considering Acquiring An Equity Stake In Zagreb Stock Exchange (ZSE)
European Bank

Norwegian Block Exchange To Become First Nordic Crypto Platform To List On Euronext
Cointelegraph