135 Exchange Invest Weekly Podcast March 12th, 2022

Transcript:

This week in the parish of bourses and market structure:

LSEG post hyper-average numbers with a hail Mary dividend rise to boot, while the National Stock Exchange of India seeks a new CEO, and the former CEO Chitra is Cuffed.

And is this a sign of the brave new Asia-centric world as the west declines? Nickel trading halted at LME due to a position taken by a man we’ve never heard of from a company that was unknown to this particular podcast presenter (despite it having 56,000 employees – okay, okay, I must be slacking) based in the city I struggled to find on a map.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 135.

Good day ladies and gentlemen, this is a very brief reduction of highlights amongst the key headlines from the past week in market structure. All the analysis of the many events and happenings can be found in Exchange Invest daily subscriber newsletter, the unique guide to the bourse business sent daily to your inbox.

More details at ExchangeInvest.com.

Over in India, the National Stock Exchange holy hoax colo fraud continues appears the story developed this week with Chitra Ramkrishna seeking pre-emptive bail at the tail end of last week (what a fascinating cornucopia of curiosities the legal system of India includes) That pre-emptive bail was without success. The former NSE CEO Chitra Ramkrishna was duly arrested on Sunday in the festering aftermath of what Sebi thought was its resolution of the colo crisis just a few weeks ago.

The holy hoax fiasco has taken on a life of its own with Chitra now imprisoned for at least 7 days and doubtless taken out lumps, out of the National Stock Exchange’s potential IPO valuation, presuming there’s even a viable chance of a listing in the course of the next year.

“Xiang Guangda, who controls the world’s largest nickel producer, Tsingshan Holding Group and is known as “Big Shot” in Chinese commodity circles, has according to the South China Morning Post closed out part of his company’s short position in nickel and is considering whether to exit the wager altogether” that’s according to sources.

So, having never heard of Mr. Xiang Guangda, who controls the world’s largest nickel producer Tsingshan Holding Group (my bad for not knowing that, I suspect we’ll be hearing a great deal more in forthcoming months about Mr. Guangda and Tsingshan Holding Group as it strikes me he may yet be in the history books for market upheavals, let alone swingeing losses…

In this case, the big short looks to be costing a major nickel firm, a lot of money even for those who for whom “a billion here, a billion there and soon we’re talking about real money” mentality prevails. The London Metal Exchange has found themselves in a sticky situation, although there seems to have been rapid action taken, albeit whether it helps or hinders the original short remains to be seen.

Certainly, it’s an interesting test for the LME Clearing House, although there’s no evidence so far to suggest that the CCP dam was being breached, as we recorded this podcast.

That said it may take a few days to unpack and it may even be next week’s podcast edition before we know exactly what’s going on. And of course, we can muse on one mega short being caught out during the Ukraine invasion.

Speaking of Ukraine invasion that has marked a very sad moment geopolitically, and it was sad – if entirely understandable – to see industry associations led by FESE (Federation of European Securities Exchanges) suspending Russian members by dint of their government’s actions of late. EACH (European Association of CCP Clearing Houses) was also swift move while the WFE (World Federation of Exchanges) and eventually the London Bullion Market (LBMA) were laggards with this process. Indeed, the LBMA was days in arrears of even the Eurovision Song Contest suspending Russia. Euromoney ran a creed occur Russia’s Financial System: What A Waste.

It’s a mot juste headline. It’s so sad to see all the excellent work by MOEX and other exchanges in Russia being torn apart by the increasingly unhinged Russian leader. Then again the worry is without Putin who would lead Russia and would it be any better?

The closure of the Russian stock markets prompted many headlines such as one in the Spectator musing Will The Russian Stock Exchange Ever Reopen?

Of course, the answer is I’m sure of course it will!… albeit through no fault of the many good men and women who created a powerhouse in MOEX and those whose endeavors elsewhere gave birth to SPIMEX and the St. Petersburg Stock Exchange, tragically, a full generation of achievement has been hugely imperilled by a land grab from the Kremlin more becoming of the 18th or 19th century than the 21st.

Bloomberg indeed examined the sting in the tail of stock market closures this week by noting: Shutting Down Stock Markets Tends To Only Delay The Declines

On a happier note, congratulations amongst others and a very Happy International Women’s Day to all our listeners. NASDAQ CEO Adena Friedman made Time Magazine’s First “Women Of The Year” list one among a dozen of superhero American women.

Brexit, City A.M the truth is out there. The Brexit impact is minimal, the City of London lost only 7500 jobs.

Of course, the unrepentant Bank of England always wants more time before risking their gilt-edged pensions on any suggestion things might be remotely okay. Thus we had the headline and Reuters: Brexit fallout on finance will take years, says Bank of England. That contrasts with the vulnerable outpourings of that ghastly Canadian windbag Governor whose hot air he never seems to have adequately accounted for in carbon terms or being earth problematic as a whole despite it never proving Brexit accurate. Anyway, it’s a simple truth and one Exchange Invest was believed in: the City of London is far from dead – actually, it’s flourishing #DespiteBrexit. The usual scaremongers have been proven wrong once again but then I have a new seam of Russo-catastrophism to serve their perverse desire for perma-negativity.

Results this week: well, the London Stock Exchange Group as I mentioned at the top of the programme, produces some rather milk toast numbers, as gradually Refinitiv permeates the entire organization and brings the LSEG down to earth. A dividend rise was smacking off, well, desperation as Out Of His Depth Dave, the group CEO is trying to avoid the slippage of LSEG being ultimately held hostage by what used to be Reuters Financial.

Johannesburg Stock Exchange, they had rather disappointing numbers as well, a 6.5% drop in annual profit. While the Nigerian Exchange Group recently listed on their own market, they announced growth of 22.2% in profits after tax. The Saudi Stock Exchange also a recent IPO candidate, they equally produced very impressive numbers, 17% profit hike in the first post listing results they delivered.

New markets this week: the former Hong Kong Exchanges Chief Charles Li is proposing a Hong Kong market for Chinese offshore bonds. Charles himself said, “China should set up an innovative bond market in Hong Kong and enhance transparency and trading efficiency to address concerns of offshore investors”. Interesting idea all round!

Cryptocurrency Exchange FTX, who recently got themselves a license in the Bahamas, they’re going to work from Cyprus for their European operations. Having secured a license there recently. Not really sure Cyprus is the top-tier jurisdiction sending the best message, but at least the island, well, I suppose be relieved that it’s diversifying from its rather Russell-centric business model.

The Singapore Exchange backed to private market platform ADDX has announced that Oi-Yee Choo will be appointed its Chief Executive Officer subject to the Monetary Authority of Singapore’s (MAS) approval. The investment banking veteran aims to build Asia’s largest private market exchange and record a billion dollars in transactions by 2023. That’s quite a lot to do in just 18 months.

Deals news this week: Level ATS and Luminex Trading and Analytics have completed their merger while NASDAQ priced a $550 million senior notes offering an aggregate principal amount of 3.950% senior notes to 2052. Quite fascinating because at the same time the CME they’re looking for 10-year money $750 million of it due 2032 and they’re paying an interest rate of 2.650%.

Finally deals this week: IG Group they’ve announced they completed the sale of Nadex and the Small Exchange.

Don’t forget ladies and gentlemen, there’s still time for you to manage to get a copy of “Victory or Death” – Blockchain, Cryptocurrency and the FinTech world, my latest book examining the wonderful, fascinating, incredible opportunities that are taking place 20 years on from the “Capital Market Revolution!” right across the exciting gamut of FinTech and markets.

While you’re waiting for your copy of “Victory or Death” to arrive, don’t forget, to check out our Livestream, Tuesday at 6 pm London time, that’s 1300 New York time a low check this week, because of course, we’ve got a clock change. We’re looking forward this week to a fantastic session with Trabue Bland, he is the master of the futures that’s the master of the futures of Intercontinental Exchange right across their incredible exchange-traded derivatives portfolio. Check in this Tuesday, it should be a very, very exciting session! Also, if you want to go to YouTube.com and look for IPO-Vid. You can check out last week’s broadcast where we were talking to Nigel Feetham QC he’s the head of financial services within Hassan’s law firm which is one of the premier law firms in Gibraltar. And we were talking about how Nigel is a FinTech renaissance man.

Product news this week: ICE benchmark administration has introduced the ICE US dollar inflation expectations index family. Aquis Exchange, they’re adding a welter of Czech and Hungarian stocks to their Pan European market, while Euronext has announced the launch of the AEX ESG Index to meet the market financial community’s sustainable investment needs. The American Bankers Association (ABA) Bipartisan Bill they have backed hopefully will ease a Libor fixes that’s been introduced into the Senate of the United States of America while worrying statistic if you’re using USDT and you have a concern about AML KYC and all those sorts of regulatory things, 80% of China’s crypto fraudulent schemes are carried out using the USDT coin.

Australia this week, they’re freeing up carbon credits for sales to the private market for the first time. And there were questions being asked about the staying power of cryptos rediscovered refuge status by Bloomberg. Oil is soaring all manner of commodities are in the stratosphere, Bitcoin has bounced a bit. I’m not quite sure the safe haven theory is holding all that well?

Speaking of safe haven theories, the South China Morning Post got very excited this week: As China’s Yuan Seeks To Challenge US Dollar, What Role Will Russia Play? Of course, when it comes to the one being the world’s reserve currency or even in the top three, there’s just that little bit about free convertibility? Then again, maybe the Chinese hope to amp up the Brussels-Frankfurt playbook, whereby the Eurozone seemed to reckon to have total control of their Euro.

Technologies this week: gripping stuff from BMLL, the vendors of an exquisite 15-petabyte lake of data which they curate highly effectively. “The View From The Feed” their latest Markets Lens was published this week for those of you who love the thrill of your brain coming close to overheating, like those liquid helium vats at the end of “The Man with the Golden Gun”. It’s another simply scintillating read from the Men and Women with the 15-petabyte (and growing) Golden Data Lake.

Digital Asset they’ve announced the general availability of their markup language Daml 2.0 while ICE Mortgage technologies eClose Solution save lenders 70 minutes per loan. A material improvement for all parties and a good example of how exchange nous can expand to a cornucopia of other financial processes.

Regulation news this week: in sweeping their way through a nomination process which looks to have gone absolutely easily and swimmingly, President Biden’s 4 CFTC nominees all called for more powers for the Commodity Futures Trading Commission to be regulating and policing crypto as they sailed through the Senate Agricultural Committee hearing.

The FCA in the UK are not happy about Binance once again, they’re endeavoring to close backdoor access to UK regulated status for one tentacle of the Binance octopus. And meanwhile, the President of the United States of America, Joe Biden (Joe Brezhnev, as we call them an Exchange Invest) ordered studies on regulating and issuing cryptocurrency, presumably the brief run “Check out this Bit- malarkey” in the first line.

Career paths this week: India’s National Stock Exchange, as I mentioned at the top of the show, is seeking a new CEO that’s before the planned IPO presuming of course that the planned IPO was not already been endangered by the Chitra Ramkrishna crisis, the holy hoax fiasco and colo and all of that. Clearly, the NSE are trying to make it look as if they are back in charge of the narrative post the “Holy Hoax” fiasco, albeit it seems that the holy hoax fiasco hasn’t actually read the memo that it’s supposed to be finished, done and dusted. Thus another CEO of the exchange, in this case, Vikram Limaye will be leaving office hours his term ends in June. Question of the week, will Vikram Limaye now get the same multimillion-dollar payoff as his now disgraced predecessor Chitra Ramkrishna?

Sad news this week vale the founder of CRT (Chicago Research and Trading) at one time, benchmark and options trading across the world. We were saddened to hear the news of the death of Electronic Trading Pioneer Joseph Ritchie.

Demonstrating the increasing importance within the Intercontinental Exchange of their mortgage business, Marti Tirinnanzi who currently serves on the ICE subsidiary Board of Directors, ICE Mortgage Technology Inc. is filling a newly created ICE board slot. At the same time, ICE announced that Directors Charles Crisp, Frederick Salerno and Vincent Tese will not be standing for re-election at the company’s Annual Meeting of Stockholders to be held on May 13, 2022. Mr. Salerno, who has served as ICE’s Lead Independent Director since 2008, will be succeeded by Thomas Noonan, who has been a Director of ICE since September 2016.

One final fascinating hire this week: straight from B3 in Brazil, their CFO is going to be joining the Hong Kong Exchanges as the Co-Head of Emerging Business Development. Of course, with the Ukrainian invasion in full swing, thanks to Russia’s military intervention. For those of you who like to see a truly robust (if not downright feral) yield curve, Russia’s Central Bank had last week hiked Ruble interest rates to 20% from 9.5% by the close of business last Monday.

Meanwhile, a lot has been made in the media of the Moscow exchanges closure over the course of the last week or so, which many journalists have pronounced as being the longest in Russian history. Perhaps you can remind me dear listener, how much Russian trading data is available on say Bloomberg or indeed within BMLL’s 15-petabyte trading data lake from say, Q4 1917, to the opening of MICEX on January 9, 1992.

And on that mysterious and magnificent note, ladies and gentlemen, my name is Patrick L. Young, publisher of the Exchange Invest newsletter, wishing you a great week in life and markets.

LINKS:

Exclusive | NSE Co-Location Scam: CBI Arrests Former NSE CEO Chitra Ramkrishna
CNBCTV18

NSE fraud: Anticipatory Bail Plea Of Chitra Ramakrishna Dismissed
Daijiworld

NSE Ex-MD Chitra Ramkrishna Sent To Seven-Day CBI Custody In Co-Location Scam Case
The Hindu

Nickel Suspension – Temporary Cessation Of Publication Of Official Prices And Closing Prices
LME

Nickel Suspension Update: Criteria For Resumption Of Trading And Application Of Price Bands
LME

LME Forced To Halt Nickel Trading, Cancel Deals, After Prices Top $100,000
Reuters

Chinese Tycoon Behind Big Nickel Short Facing Losses Worth Billions Of Dollars
South China Morning Post

Board Votes Unanimously To Exclude Moscow Exchange From FESE
FESE

European Exchanges Body Votes To Exclude Moscow Exchange
Reuters

Russia’s Financial System: What A Waste
Euromoney

Will The Russian Stock Exchange Ever Reopen?
Spectator