126 Exchange Invest Weekly Podcast January 8th, 2022

Transcript:

This week in the parish of bourses and market structure:

RIP LIBOR, CBOT floor goes electric and it’s NASDAQ 743 versus LSE 133 to complete what was a record year for IPOs…

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 126.

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 which took place during the course of the past week can be found in Exchange Invest’s unique daily newsletter. The subscriber guide to the bourse business sent daily to your inbox

More details at ExchangeInvest.com.

Nasdaq welcomed 743 IPOs and 35 Exchange transfers in 2021. A sensational performance, more IPOs in one group than we had across, well, whole continents not that long ago. By comparison, the London Stock Exchange was incredibly excited at being the European market leader with 133 IPOs. Admittedly, that was three times 2020.

But nonetheless, a pale shadow of what went on in North America NYSE, by comparison, I made at 265 by early December, making for an incredible 1000 listings between the two leading US stock markets alone. Indeed, NASDAQ ended the year only a whisker short I believe has double the New York Stock Exchange money raise. By early December it was $191.38 billion on NASDAQ versus $109.25 billion on NYSE – that makes a huge volte-face from most years post dotcom where NYSE has been the listings leader.

Meanwhile, over in Istanbul, the number of investors in the Turkish Stock Exchange Borsa Istanbul has reached 2.4 million, adding 500,000 people from the 1.9 million who were registered in the previous year according to the head of the Capital Markets board of Turkey.

The European Union’s securities watchdog ESMA said “Please don’t cut off a Euro clearing in London for now. London’s two big derivatives clearinghouses should not be cut off from customers in the European Union until there are incentives to shift business to the block such as capital charges” ESMA has said according to an article in Reuters, it amounts to the dirty desperate war of deranged Euro-control.

Meanwhile, speaking about the dirty desperate derangement of European regulators, FESE (Federation of European Securities Exchanges) had cause to gripe before Christmas as they raised concerns over ESMA’s annual statistical report on 2020 data with Brexit looming on December the 31st of 2020. Well, ESMA indulged in a prodigious piece of spurned spouse meets Muppet madness, as much as carved the UK’s 19 trillion Euros in equity trading out of the 2020 statistics.

Presumably, this was a kind of post-horse bolt repo move to try and make the European Union look more viable after Brexit (which took place of course, at the start of last year).

Plaudits to FESE for pointing out this amateur hour manipulation of data, which hadn’t been done by an enterprise would have led to no end of sanctions and complaints, I think. This amounts to a very embarrassing start for new ESMA bosses Verena Ross and Natasha Cazenave. As for any notion that the EU ESMA can be trusted, that’s well, dizzyingly proximate to the same level say Worldwide wrestling, or fair results in Formula One for credibility.

Good news from the LME, at least from a customer perspective, they’re leaving trading fees flat in 2022, owing to the pandemic. And that jumps us into some big stories from this year so far, Hong Kong’s IPOs appear to be exempted from the finalized cybersecurity rules. That’s going to be a big fillip to the Hong Kong exchanges. It seems that the cybersecurity rule check audits will only take place if you’re seeking to list on an exchange that is outside China. And of course, China includes the special administrative region of Hong Kong.

Elsewhere, Hong Kong we’re eager to make the most of a dynamic festive season SPACs a gogo and ETF Connect being agreed.

The former futures trading floor of the Chicago Board of Trade is going to become an electricity substation. ConEd bought the 300,000-square-foot 333 La Salle Street building, which formerly housing part of the CBOT floor. ConEd purchased it from CME Group for $39.5 million.

Thus, the once electric atmosphere gives way to a more elemental electric generation facility. The floor itself had been known as the “Arboretum” after the (now disgraced) Chairman Pat Arbor, who led the project. It famously had space for a Boeing 747 to set such as the size of the floors. Alas, despite moving their HQ to Chicago a couple of years later said aviation Corporation never bit the bullet to deploy said floor as a showroom (as indeed I mused at the time and the Financial Times). Interesting that Pat Arbor was quoted in the article from the Chicago Sun-Times about the ‘Arboretum’ being sold to ConEd. Noting “he and other exchange leaders were slow to appreciate how fast electronic markets would develop”. Well, there’s an entirely honest comment, where almost an entire generation of exchange ‘leaders’ lack the ability to foresee the future.

Over in Bangladesh, the Bangladesh’s SEC is pushing for the Dhaka Stock Exchange and the Chittagong Stock Exchange to achieve demutualization as soon as possible.

At the top of this show, I mentioned the incredible number of IPOs in North America. Well, here’s our cracking statistic for 2021, which amounts to being the year of the option. The OCC, the Options Clearing Corporation, they’re the people who care about all of the individual stock options tradings in the United States of America, they cleared a record-setting 9.93 billion total contracts, which amounts to volumes being up 32% in what amounts to a mature market.

Elsewhere in mature markets the CME Group, their average daily volume is up 4% year on year which was highly disappointing.

In Brexit news, London’s Banking Job Exodus to the European Union has slowed despite Brexit. Essentially a load of share trading moved to the European Union and the jobs stayed in London. I suppose that’s why we can understand how EU apparatchiks are ending up waking in the middle of the night with a fever brow screaming “substance”.

In new markets this week: Warsaw and Budapest Stock Exchanges are teaming up to create a new commodity market clearinghouse in the Hungarian capital.

Elsewhere, talk about laying the groundwork for a Congolese Stock Exchange and Africa got its ‘First Digital Exchange’ for native producers ACEX.

Despite the festive period we still had a few interesting deals. The EEX (European Energy Exchange)- they’ve acquired the energy analytics firm Lacima Group.

Meanwhile, the Competition Bureau of Canada reached an agreement with S&P Global related to its acquisition of IHS Markit.

And in a little piece of news, which is very exciting for PLY myself, Patrick L. Young, the presenter of this show, for it relates to a company of which I’m an Executive Director of the Aquis Stock Exchange-listed Valereum.

Valereum has made a move to acquire the Juno Group (a major trust provider in Gibraltar) bringing trusts fund administration and company administration under the Valereum banner, lots of messages about that over the Christmas holiday period. And don’t forget, Valereum also holds an option to acquire the majority of the Gibraltar Stock Exchange.

If you’re looking for some reading, whether you’re locked down, whether you waiting for the results of your PCR test, your lateral flow test, or indeed you just happen to be looking for something interesting to read. Don’t forget my latest book “Victory or Death” – Blockchain, Cryptocurrency and the FinTech World to understand how technology is affecting life and markets. This is the book to help you 20 years on from the excitement of the original FinTech best-seller “Capital Market Revolution”.

While you’re waiting for your copy of “Victory or Death” to arrive, check out our Livestream. That’s on Tuesdays at 6 pm London time, 1 pm New York time and we will be back, coming this Tuesday.

In crypto land, gosh, an epic moment with a crypto exchange, Binance has signed a deal to be regulated in the Dubai World Trade Centre. Given the itinerant nature of the controversial Binance brand for many years, perhaps some might see this as, well, not being ideal branding for Dubai itself. Does it mean the HQ-reclusive Binance has finally settled on somewhere it will call home and even have an office the public can locate? Watch this space or I suppose listen to this space.

Elsewhere, the CFTC got laid in with the first big fine of the year. They went after the “Decentralised” prediction market platform Polymarket, fine them $1.4 million, and ensure that they shut down non-compliant markets. Splat! First blood to the CFTC. I would expect more as the year goes on the binary polymath. Surely binary polymath is kind of a contradiction in terms. Anyway, polymath was censured and I would imagine Gary Gensler’s SEC will be eager to catch up with their cross-time, futures-based rivals, the CFTC.

Finally, in crypto news this week: Kevin O’Leary “Mr. Wonderful”. The Kevin O’Leary-backed WonderFi is buying the Canadian crypto exchange Bitbuy.

Product news over the course of the Christmas holiday: the Shanghai London Stock Connect will soon include Germany and Switzerland apparently. Elsewhere, Hong Kong Exchange itself has opened two SPAC listings from January 1st and the Nigerian Exchange is concluding arrangements to roll out its first set of derivatives on its largest single stock names and a move expected to deepen the stock market and provide investors with new investment instruments.

Technology news over the course of the festive season: Equinix – announced a collaboration with NASDAQ to scale their digital infrastructure. That agreement supports the build-out of cloud infrastructure in Carteret, New Jersey. In other words, Nasdaq is going nowhere. Their shift to the cloud is committing to New Jersey avoiding major hassles for many traders, but at the same time, it sounds as if NASDAQ is comfortable. There’s not going to be a securities tax in New Jersey as has been threatened only a few months before.

The acquisition of Trading Technologies by 7RIDGE is now complete. It’s a good piece of news that appeared over the course of the festive season.

Elsewhere in technology news: the Philippine Stock Exchange, they were forced to cancel trading on Tuesday, the 4th of January over a technical glitch.

SEBI (the Indian regulator) is planning to bring in a third-party agency to revamp its IT network and communication systems. Doubtless, there will be a vast and convoluted RFP, RFQ, RF-anything else that they can possibly think of, and at some point, that process will result in them choosing Tata or some other Indian combine.

Regulation news, ESMA is launching calls for evidence on distributed ledger technology and rule changes to accommodate tokenized securities. Elsewhere, El Salvador, they’re planning a raft of legislation to cover their Bitcoin bond issuance.

In the USA, that’s leading career path news: Joe Brezhnev, I mean Biden I mean actually Brezhnev, the American president has tapped two new Republican members of the Commodity Futures Trading Commission. Summer Mersinger and Caroline Pham are looking to fill the Republican spots on the CFTC.

Elsewhere, Elad Roisman on the other side of Washington, he’s announced his departure as a commissioner of the Securities and Exchange Commission. There’s a new CEO of the Qatar Stock Exchange, Tamim Hamad Al-Kawari is going to replace Rashid Bin Ali Al-Mansoori, who is going to remain on the Board of Directors of the Qatar Stock Exchange for some time to come.

Keith Todd has assumed the role of Chief Executive of Trading Technologies. Farewell, then Tim Geannopoulos, who is only in situ as Rick Lane’s TT successor since January. Keith Todd is gonna bring a new perspective to Trading Technologies. And finally, in career paths Equiti Group – they’re in the business of CFD and related broking, I believe. They’ve appointed the former CEO of the DGCX (Dubai Gold and Commodity Exchange) Gaurang Desai to lead their strategy. All the very best to Gaurang.

In ‘Big World’, a New York Post’s story struck us during December: America is Finally Getting Wise To How Bad A Deal College Can Be. Being generally underwhelmed by the mediocre groupthink, which is bestowed by the college on many (more blob-centric blunt force trauma to the brain than thinking expander per se) that university tends to be, it surprises me not that there’s a big market failure out there in the expensive dogma styling itself as ‘education’. Why bother spending three years and a six-figure sum (most ending up as debt to get out of Gamma-Delta -Omicron frat-ority only to find the nerdy kid who spent hours on Coursera for free or for next to no dollars, is a long way up the earning ladder as a coder.

This is a megatrend – the outmoded university system is utterly unfit for purpose in the USA, UK and Europe. Thus, US student enrollment is rather shockingly down 6.5% over the course of the last two years.

And finally, let’s end this week in the courtroom. Ghislaine Maxwell is looking at a long time before she exits slammer central somewhere in the USA and of course, a huge element of the media are wildly sympathetic because posh socialists with privileged backgrounds shouldn’t be subjected to the same forces of law and order as the rest of us.

Meanwhile, in other court news, as Elizabeth Holmes coiffeur soared to new heights of achievement, it seems she beat 4, the jury deadlocked on 3, but she got beaten by 4 charges from her blood testing software, where the prick seemed to be anywhere but in the blood testing, as it were.

Anyway, nobody seems to have noticed in the mainstream media but were you aware that her parents are a former Congressional staffer and an Enron executive? How on earth this young woman’s moral compass could have fallen so far from its natural magnetic north point of honesty is clearly a topic for heated dinner party conversation during the course of January.

And on that mysterious, magnificent note, my name is Patrick L. Young. I would like to wish you a great week in blockchain, life and markets and a judiciously distributed, happy, healthy, peaceful and prosperous new year.

We’ll be back next week, same time, same place. Have a great week.

LINKS:

Nasdaq Welcomed 743 IPOs And 35 Exchange Transfers In 2021
Nasdaq

The NYSE’s Record Year For New Listings Focuses Attention On Sustainability
NYSE

Number Of Borsa Istanbul Investors Up To 2.4 Million
Hürriyet Daily News

Don’t Cut Off Euro Clearing In London For Now, Says EU Watchdog
Reuters

EU Should Reduce Dependence On U.K. Clearinghouses, ESMA Says
BNN

FIA Statement On ESMA’s Conclusions From Its Assessment Of Tier 2 CCPs
FIA

Exchanges Raise Concerns Over ESMA’s Annual Statistical Report On 2020 Data
FESE

ESMA Reports On Derivatives And Securities Markets In 2020
ESMA

LME To Leave Trading Fees Flat In 2022 Owing To Pandemic
Nasdaq

LME Group Fees And Charges L
ondon Metal Exchange