145 Exchange Invest Weekly Podcast May 28th, 2022

TRANSCRIPT:

This week in the parish of bourses and market structure:

LSEG buys MayStreet, FTX to trade US stocks, All change in Hanoi, and there’s a certain irony NSE India is the hottest stock albeit only available to trade via the OTC market.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 145.

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 past 7 days 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.

National Stock Exchange of India shares are seeing hectic trading. Apparently, tax evaders are having a field day at the same time according to other missives in India of lit. The heavy trading in NSE is of course quite fascinating for the simple reason that with lot sizes not as small as 500 shares (previously it was 10,000) that’s encouraged a lot of dealing and a lot of dealing amongst retail investors. Of course the irony there is the National Stock Exchange is still trading on the over-the-counter market privately due to SEBI’s reluctance to sanction an IPO for over a decade and more.

Meanwhile, the “Holy Hoax” Co-Lo fiasco festers on with more than 10 locations arrested last week by the fraudbusters of the CBI and Chitra Ramkrishna, the former NSE CEO is under duress she’s received a reminder now she has to pay 3.12 billion Indian Rupees ($400,000) – including interest and fees since the first demand went unpaid in February. Presumably, wifi is poor in her cell to access internet banking.

Over in Russia, they are lifting their short-selling ban from June 1st. Well, there’s an interesting article in the Wired UK this week discussing How Tired Old Offices Can Be Recycled Thanks To Urban Mining. That’s a fine art that helped some builders recycle much of ICAPs One Broadgate offices in the former Liverpool Street shunting yards on the edge of the city of London.

In Warsaw, we’ll be hearing more about the Warsaw Stock Exchanges as this bulletin continues but GPW they’ve partnered with M-DAQ to pilot multicurrency quoting for Polish securities.

I always thought multi-currency trading of stock was a no brainer at the exchange level. And I’ve been saying so for the past 20 years but adoption has taken a while longer at least the good news is GPW (the Warsaw Stock Exchange) is amongst those in the forefront.

A little spot of Brexit news this week, the European Union’s finance watchdog, ESMA they’re calling for a ‘Workable Balance’ in the derivatives Brexit battle.

That’s yet more CCP “jaw jaw’ as there is a degree of realisation emerging that ESMA/EU’s protectionist Madness has actually done more harm than good for the protectionist bloke so far in driving business out of the European Union rather than into it.

It was a busy week for results in the parish, all the deals were 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 some edited highlights.

Euronext saw revenues rising 58.8%, of course, it was the exciting news of the first integration there essentially of numbers from Borsa Italiana, which they bought a remarkably reasonable price last year, while at the same time we had results which showed the Warsaw Stock Exchange itself was essentially fairly flat and Colombia came in with profits up 44% and indeed EBITDA was up 50% for the Tel-Aviv Stock Exchange this first quarter of 2022.

That said the after-tax profit of the Budapest Stock Exchange for the year 2021 beats them all profits raising fivefold during the 2021 year.

New market news this week: the Ethiopian Securities Exchanges creation is moving a step closer. Ethiopia’s Ministry of Finance, the Ethiopian Investment Holdings Corporation and FSD Africa have signed a cooperation agreement to establish the ESX.

In the USA, AEGIS (swap execution facility) – they’re nearing final approval from the CFTC. Now, somebody thought there weren’t enough SEFs, I hadn’t really reckoned on there being more…albeit AEGIS is not quite the pure interest rate Swap-SEF space per se, it’s a commodity cum environmental platform.

Deals this week, very busy week: LSEG, they’re buying more data assets they’re acquiring MayStreet adding a little bit of high frequency trading vigour to their Refinitiv assets.

Valereum, of which yours truly happens to be a Director, they’ve announced that they’re advancing their Gibraltar Stock Exchange acquisition and awaiting permission from the regulator (Gibraltar Financial Services Commission).

Warsaw Stock Exchange once again, they’ve acquired finally (after several years of negotiation through COVID) the Armenian Securities Exchange buying 65.03% for circa 1.8 million US dollars.

The real politic probably makes more sense here than the deal. There’s no real business rationale for GPW buying something that is a fraction, a microcosm of their existing Warsaw business, however, methinks the Armenian government (which had quietly bought NASDAQ OMX a few years back) are playing politics given the huge losses they incurred in Nagorno Karabakh during the lightning 2020 war where the Turkish backed Azerbaijan made good use of the Bakyraktar drones that are now integrally useful to Ukraine’s defence against Russia, in decimating Armenian forces in what has become colloquially termed “the 44 day war”. Perhaps an Armenian Stock Exchange being sold by the government of Armenia to the Warsaw Stock Exchange, which is controlled by the Polish government makes complete sense through that lens.

Certainly, regional hub talk is a tad premature with the acquisition of just one micro-market Armenia to Warsaw’s Polish monopoly but at least the deal is done finally.

One final piece of deal news this week: Thailand Stock Exchange they are one of the backers in round B of ADDX, the Singapore-based private market which has raised some $58 million dollars in Pre-Series B.

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This week, we had another exciting discussion about the world of data building on Jonathan Bloch’s appearance just the week before we were discussing “Delivering SaaS (software as a service) Through TT with the chief executive of Trading Technologies, Keith Todd. Coming up this Tuesday “Bourses As Businesses – Good or Bad” and our special guest is going to be the former CEO of the Berlin Bursa Artur Fischer.

One spot the news from slightly across the other side of Germany this week as it applies to Cum-Ex. German prosecutors are intensifying their Cum-Ex probe in Iran, Deutsche bursa self. That’s a rather worrying extension to the parish from the Cum-Ex fiasco which has remained actually remarkably muted and overall media impact given the extent of this willful fraud. How the investigation may impact DB1 ultimately clearly remains to be seen.

In crypto land this week: Coinbase – they’re slowing down their hiring amid the crypto market downturn and of course the vast losses in their stock. At the same time we hear the news that Binance is apparently actively applying for licenses in Germany just shortly after receiving their licence in Paris.

FTX – they’ve been quietly shopping around for brokerage startups amidst their move into stock trading. Bitbank (a crypto-asset exchange operator in Japan) has signed a memorandum of understanding with Sumitomo Mitsui Trust Holdings to establish a trust company specialising in digital assets.

Product news this week, Vietnamese officials are backing a new partnership to tokenize genomic profiles. I wonder will that include the genomic profiles of those who’ve been accused of fraud within Vietnam? But more on that in a moment stay tuned.

Russia is likely to legalize cryptocurrency for a payment ‘Sooner or Later’ according to one of the ministers there, despite the central bank having a few months ago proposed a ban.

An epic watershed moment perhaps in the world of Eurodollars. Libor successor has overtaken the original classic Libor Eurodollar futures in trading volume on the CME. Volume in three months SOFR futures reached 1.34 million contracts on CME, 15% higher than Eurodollar futures volume at 1.16 million contracts.

Raw volume statistics are not usually the thing that Exchange Invest to this podcast maxes on but it’s an interesting statistic denoting the transition, an epic transition in the interest rate benchmarks space.

Hong kong’s new listings – their volume of stock to a new 9-year low that’s on the China slowdown of which we’ll have some statistics in a moment, while as I trailed just a few seconds ago FTX US they’re launching stock trading backed by the denomination in stable coins not quite the range of currencies as M-DAQ but nonetheless the opportunity to pay with your preferred stable coin for a series of US stocks.

It’s an interesting move of course and indeed it mirrors the pre-existing plan (awaiting Gibraltar financial services permission for the acquisition of the Gibraltar Stock Exchange by Valereum PLC)

Elsewhere Dubai Financial Markets they’re going to be launching the trading of new crude oil contracts in June. It’s the first outcome of collaboration between DFM (Dubai Financial Markets) and DME (Dubai Mercantile Exchange)

Over a New York, a long-running saga, even though it seems as if there might yet be some degree of resolution over the audit requirements for Chinese stocks listing in the USA nonetheless, it didn’t come soon enough for Didi shushing, Didi Shareholders have voted to delist from the New York Stock Exchange in the wake of China’s tech crack dawn.

Regulation news this week Gary Gensler is seeking a budget bump for the SEC. He’s citing crypto trader targets, then again having to do it produced a lot of hype but very little in results, it would be tough to justify an SEC budget hike methinks, given the broad-based ineptitude of the “adult” Brezhnev regime with its chronic addiction to spending, of course – albeit off that Gary Gensler won’t manage to carry off an enormous rise in due course results or no results.

Nonetheless, one result that was very worrying for the SEC according to an appeals court, the in-house judges of the SEC’s own commission panels violate the right to a jury trial – that prompted the headline in Bloomberg: Is The SEC Unconstitutional? Clearly, this could be a fissure that has a potentially seismic impact.

Last spot in regulatory news this week, Panama’s president, he’s refusing to jump behind El Salvador’s, who of course, as we know is doubling if not tripling down on his Bitcoin as a currency move right now. Anyway, the Panamanian president, he’s refusing to sign a current crypto law and the reason for that is he wants to see tougher anti-money laundering controls. Bravo! I say we’re all for good anti-money laundering and know your client In the world of modern markets.

Careers news this week and we reach Vietnam. Vietnam has seen the ruling Communist Party government sacking not merely the head of the regulatory body, the Chairman of the State Securities Commission Tran Van Dung, but they also managed to sack at the same time Le Hai Tra who was the chief executive of the Ho Chi Minh Stock Exchange. Both of them apparently under investigation for some form of corruption.

Deputy CEO Tran Anh Dao – congratulations to her, she’s been appointed as the new CEO of the Ho Chi Minh Stock Exchange.

Another appointment did Sri Lanka this time and they’ve got a new stock exchange Chairman Dilshan Wirasekara, who’s the Director and Chief Executive Officer of First Capital Holdings. He’s been appointed chairman of the Colombo Stock Exchange from June 24th taking over from Dumith Fernando, who served his 4 year term.

The Bitmex Co-Founder and Ex-CEO Arthur Hayes, his sentencing was this week, he managed to get away with just 6 months detention by house arrest after breaching the Bank Secrecy Act.

Frankly strikes me as a lucky escape, the US one would have thought has missed an open goal to truly punish those who dealt with licensing in the exchange market – but then again, many of those self same people who escaped even the fate of the hapless Arthur Hayes are indeed nowadays to be found in the night of Washington DC lobbying almost daily.

In ‘Big World’ this week, well, news from Atlanta, the Alliance Theatre, they had a world premiere of a musical adoption of a very famous movie centered around the floors of the New York Exchanges, Trading Places. Big swap there, they’re putting women in charge in the roles.

In other words “Duke & Duke” has morphed into “Duchess & Duchess” for the musical stage version of Trading Places. And indeed, we have a quick update as I said earlier on the Shanghai lockdown, which is known to be eased during the month of April car dealers in the Chinese megacity reported total gross sales of zero.

Yep, that is zero new automobiles were sold in the biggest city of Shanghai during the entire lockdown month of April 2022.

And on that mysterious and magnificent note ladies and gentlemen, my name is Patrick L. Young, creator of exchanges the world over, advisor of bourses and the publisher of Exchange Invest – the watercooler of the bourse business brought daily to your inbox.

Thank you for listening, we’ll be back next week with the Exchange Invest Weekly Podcast episode 146.

Have a great week in life, blockchain and markets.

LINKS

NSE Shares See Hectic Trading, Tax-Evaders Have A Field Play
Moneycontrol

Chitra Ramkrishna Moves Bail Plea In Delhi HC In NSE Co-Location Case, Judge Recuses
The Economic Times

CBI Raids Over 10 Locations In Multiple Cities In NSE Co-Location Scam Case
Daily Pioneer

NSE Co-Location Scam: CBI Carries Out Search Operations In Multiple Cities
ABP LIVE – ABP News

ED Records Statement Of Ex-NSE MD Chitra Ramkrishna In Money Laundering Case
The Hindu

Sebi Issues Demand Notice To Chitra Ramkrishna
The Economic Times

Russia To Lift Short-Selling Ban From June 1
Reuters

Tired Old Offices Can Be Recycled Thanks To Urban Mining
Wired UK

GPW Partners With M-DAQ To Pilot Multi-Currency Quoting For Polish Securities
GPW