156 Exchange Invest Weekly Podcast August 13th, 2022

Transcript:

This week in the parish of bourses and market structure:

JamStockEx powers ahead while ICE posts sound numbers once again while Xpansiv makes its second acquisition in a month.

LSEG reckons it’s on target to achieve whatever it thinks is a target for Refinitiv

while we’re not sure anybody believes this

…and Coinbase appears to be cracking.

My name is Patrick L. Young.

Welcome to the bourse business weekly digest.

It’s the Exchange Invest Weekly Podcast Episode 156.

Good day ladies and gentlemen, welcome to this episode 156, what a pleasant alpha male that was back in the day. 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 and happenings of the past seven 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.

The alleged BTC-e operator Alexander Vinnik is now in US custody after being immediately extradited from Greece after proceedings concluded there last week while Robinhood CEO Vladimir Tenev dismiss the possibility of his firm Robinhood being acquired by Charles Schwab or the crypto exchange FTX or indeed anybody will do the acquiring, he said boldly. That led me in Exchange Invest wonder what if, say both Robinhood and FTX don’t survive? That might amount to #BlueSkyThinking.

One market that looks as if it’s not going to survive is predicted, by the University of Wellington, New Zealand’s prediction market, the CFTC in an oblique judgment this week, their staff withdrew the no-action letter relating to the market which had become a favorite for political prediction market betting.

Meanwhile, the London Stock Exchange boss out of his depth Dave Schwimmer and I agree on something we should teach about the City of London at school, teaching people about the financial world in schools could unleash a new generation of investors according to the chief executive of the London Stock Exchange noted This As Money this week. We cannot agree more with this excellent sentiment. Classical education is good, STEM highly useful, but the abject lack of real-world skills taught in schools is a hindrance to bringing children into adulthood in the modern age.

The Moscow Exchange delayed access this week for non-residents from what might be termed friendly countries to Russia, presumably fear of a mass onslaught of selling being the reason why they cannot yet access the market. Meanwhile, a bit of an onslaught in Sri Lanka, the new president Ranil questioned whether the Colombo Stock Exchange was a valid platform for state-owned enterprises to be privatized upon – the reason being is the market rigged?

As president Wickremesinghe himself said: “Either you all must change or we put up a new institution. I don’t want any more arguments on that. If you have to use the present Stock Exchange, we must all be satisfied that it is neutral and benefits all”

One market that is absolutely neutral and benefits all, right across the continent of Europe and beyond, the Sweden’s Junior Market. First North, we interviewed Erja Retzen as IPO video guest #54, where we discussed her platform From First North To Infinity and Beyond and indeed this week, the Financial Times gave a glowing tribute to Erja and her team’s magnificent work under the headline: Sweden’s Junior Market Becomes Europe’s Hottest For Growth Stocks. Congratulations NASDAQ or Erja Retzen and the entire team.

In results this week, it was a frantic week for results, we’re gonna give you edited highlights this week because all the detail 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, here are the edited highlights but don’t forget you can sign up for a free 30-day trial to Exchange Invest. Just drop us a message, DM us on social media or contact us via Exchange Invest.com

ICE reported strong on Q2 2022, despite many voices beforehand, thinking that things were going to look weak. Volatile markets drove up trading volumes and that helped the overall profitability to grow during the course of the year, operating income +9% adjusted operating income +12%, an operating margin of 48% and net revenues +6% year on year. Pretty helpful for a behemoth and as ever some great words of wisdom, Jeff Sprecher himself in the results call discussing their expansion into the mortgage market.

“It’s odd to me that you can buy a completely consumable good, you can buy toothpaste on an online platform and when you go to checkout, it’ll ask you if you want to buy now and pay later, knowing that an algorithm underwrote your credit against no collateral and yet, it takes almost two months for somebody to refinance a mortgage in a house that they live in, that has a foundation that’s in the ground that has an address that you can see from space that is part of Maslow’s hierarchy of need of safety and security and will be abandoned by that person, the last thing they do. And yet, an existing mortgage talking to their bank takes two months.”

Wise words from Jeff Sprecher there and a very good reason why the conventional banking and mortgage business is in chaos.

Indeed, if that isn’t a perfect example of why fintech improves the world – and how the analogue world needs a kick in the soft underbelly towards well, we might call it Capital Market Revolution, I don’t know what is. As always, the Jeff Sprecher and Friends Quarterly Masterclass was unmissable alongside another set of very sound results from the entrepreneurial behemoth of ICE.

Elsewhere, Thomson Reuters reported Q2 results and oh the irony of this, Thomson Reuters complained that their bottom line is being dragged down by the London Stock Exchange Groups being subjected to Refinitiv Stockholm Syndrome. If LSEG had a coherent board, this would be the ultimate moment of shame for the wide ranging vertical silos Xav built, which the ODD one has proceeded to place in a corporate coma.

Nonetheless, the LSEG were making claims that their Refinitiv costs and savings are on track. Rumours the LSEG have replaced their agitprop team with operatives formerly assisting with Russian military PR for the Putin invasion of Ukraine could not be verified as we race to record this podcast. However, if you believe LSEG and you have any RFPs going for bridges, we have inventory to offer you. LSEG is also buying back stock they started already it’s a total purchase plan of £750 million of stock.

And that leads us finally to Coinbase and the great disappointment of the week, a 63% drop in revenue amidst crypto winter biting home. A lot of bleating frankly from the other analyst call there and not a great deal that really gives us pause for confidence in the future of what might be Coinbase despite their announcing that recent deal with BlackRock over the possibility of crypto-related funds.

In the new markets this week ladies and gentlemen, it was a very busy week once again for new markets in the parish, all of the information were in Exchange Invest daily, the newsletter no person can afford to be without in capital markets and market structure. Looking at the edited highlights let’s pick one this week:

MEMX, their sell-side, by-side organized cabal that have a stock exchange platform of their own, they’ve gained SEC approval to trade options. Expect MEMX options to launch in 2023, which will be one of a myriad of platforms in the very very packed US equity options market business.

Deals news this week, let’s pick a couple of highlights, buying back their stock, I already mentioned the London Stock Exchange. Hellenic Exchanges, they’re also buying back their shares and indeed last week we saw Zagreb in Croatia buying back some of their stock. Xpansiv led the deals this week -they’re acquiring Evolution Markets, and expanding their environmental market infrastructure. That of course is a very interesting way that they’re spending their recent funding from Blackstone, who invested $400 million earlier in July and it’s now driven a second deal, the first being Xpansiv Acquiring APX at the start of August.

The Qatar Central Depository Company (QCSD) they’ve amended the percentage of foreign ownership and Doha Bank they’ve now become 100% of the capital. QCSD is owned by both the Qatar Central Bank and the Qatar Exchange of course.

Now, ladies and gentlemen you may be struggling to get to grips with the world of fintech, financial markets et al. Daily, of course in your inbox, there’s the opportunity to read Exchange Invest. Just DM us or sign up via the ExchangeInvest.com website for a free trial at your leisure.

At the same time, you might want some longer reading, I would recommend a “Victory or Death?” – Blockchain, Cryptocurrency and the FinTech World. My latest book, is an easy read understanding how the world of FinTech has advanced. Well, coming up for 23 years after I wrote the first best-selling book of FinTech “Capital Market Revolution!” in 1999. “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 don’t forget, you can still check out ourLlivestreams. We’re on summer holidays at the moment, but we’re running some judicious repeats in the Tuesday 6pm London, 1pm New York time slot. You can catch all our back episodes on IPO-Vid by searching on YouTube, they’re also available on Facebook and LinkedIn.

And don’t forget we had our last live guest Steven Sears discussing “Developing Your Options”. The co-founder of Options Solution dropped many pithy and wonderful insights. I think one of the absolute gems was “Bad investors think of ways to make money but good investors think of ways to not lose money”.

The next show is coming up in September, but catch the repeats every Tuesday and of course, all the back archive of information is available. Check it out, for example on YouTube by searching for IPO-Vid.

In crypto land this week, every US crypto exchange and Binance is being investigated by the SEC, according to a staffer in the office of Senator Lummis. That’s particularly significant because the platform from which we learned this nugget – was Forbes – which is 20% owned by Binance as they await (perhaps forlornly) a SPAC deal for the publishing platform. Nonetheless, when Forbes is announcing the fact that their semi-parent company Binance is under investigation, we have to take it seriously.

Elsewhere, it’s something that was rather difficult to take seriously this week was, who actually owns WazirX.

WazirX has been gripped by panic over the course of the past week. First of all, because of problems with the crypto platform. Second of all, because it has long been thought to be owned by Binance, whereas in reality Binance doesn’t seem to own it. It’s very difficult to understand what’s going on here but it seems to be another wacky tale in the history of Binance, which was never based in Malta, other than the base that apparently had in Malta, etc, etc. and a multitude of other curious quirks to the Binance history. Even by Binance standards, the whole idea of whether or not they actually own a particular asset, which is a major exchange that they have in the past, apparently been alleged to own sounds curious.

Coinbase was in the news, of course with those dreadful results at the same time, they had some good news they inked with BlackRock, a crypto trading partnership targeting institutional clients as I mentioned earlier. They were also asking the US Supreme Court to hold lawsuits connected to stock scams and Dogecoin while their ex-employee was accused of insider trading, he’s pleaded not guilty. Nonetheless, there’s a lot of concern about that Ishan Wahi case. Many different legal analysts raising concerning questions about the SEC action gainst the former Coinbase employee.

In product news this week, many US-listed Chinese firms may not actually meet the bar to be listed on the Hong Kong Exchange. That could cause a major issue for those who have been left in audit limbo because of the disagreement between the Chinese and the US authorities.

The CME group has announced a Q4 2022 launch of European Overnight Index futures. August 29th CME Group will be launching Euro-denominated Bitcoin and Ether futures while the JSE in Johannesburg are considering carbon credit trading. People are already active in that field, of course, ICE (Intercontinental Exchange) announced this week they’re going to be hosting auctions of nature-based carbon removal credits for green trees.

Over in Moscow Exchange they’ve started trading bonds with Chinese Yuan settlement at the same time as they’ve announced that they will no longer be trading in Japanese Yen and Central Bank Digital Currency news of the week Thailand pilot CBDC could commence later this year while Australia is exploring the case for a CBDC to be launched.

Technology news this week, well, it was dominated once again by the aftermath of the ASX delaying the CHESS rollout for the 5th time and it’s the users who are paying noted by the Australian Financial Review.

In this tragic fiasco where ASX and DAH look horribly mediocre, the good news is that we may have only another 18 months or so to go of this brand crucifying market confidence shattering negativity brought on by the ASX’s own stubborn management and abject incompetence or indeed, we might have 18 months to go until the next delay is announced, presumably.

Regulation news this week, the SEC is proposing rules to improve clearing agency governance and to mitigate conflict of interest. As ever, the voice of reason falls to Hester Pierce:

“This proposal is puzzling for a number of reasons. First, in 2016, when the Commission finalized rules establishing standards for a subset of clearing agencies, it expressly rejected the suggestion from several commenters that it impose a director independence requirement.”

Career path news this week, Mohamed Farid has been appointed as interim chairperson of the Financial Regulatory Authority (FRA) in Egypt. That sees him moving on from a very successful chairmanship of the EGX (Egyptian Exchange) over the course of the past 5 years. Ahmed Abdel Rahman the Vice-Chairman of the EGX was named acting chairman in the meantime. Also news in career path this week, Kevin Wolf, the CEO of Euronext FX and Euronext US is leaving the group to pursue external opportunities. All the very best to Kevin, I wish him well with his next endeavor.

Meanwhile, in ‘Big World’, word reaches us that for the first time since 1847, a shark attack has been reported in British waters with an injured snorkeller being rescued by the Coast Guard. The lady has only relatively minor injuries and is expected to make a full recovery.

Nevertheless, it’s worth reflecting: this as the first shark attack in British waters since the year that sold the first publication of the “why did the chicken cross the road?” joke, Samuel Colt sold his first pistol to the US government, Verdi’s Macbeth premiered at Teatro della Pergola, Florence, the first Carlsberg beer was brewed in Copenhagen and Emily / Anne Bronte published Wuthering Heights and Agnes Grey respectively.

A woman has bitten by a shark in UK waters for the first time in 175 years, it clearly leads to only one question: “When will the indignities of Brexit end for the UK?”

Meanwhile, in their latest “you can’t make this up” like pouring the Bank of England have issued a blog post Cryptoassets, the metaverse and systemic risk on their bank underground blog, this cautions that the metaverse could lead to systemic risks for the financial system.

Gosh, thank goodness the old lady of Threadneedle Street remains such a watchful and wise steward of inflation of the British economy and of the Pound Sterling.

And on that mysterious and magnificent note, ladies and gentlemen, this is Patrick L. Young creator of exchanges and markets, publisher of Exchange Invest the bourse business daily newsletter, wishing you from a noisy sunny, hot Valetta to have a great week in blockchain, life and markets.

LINKS:

Alleged BTC-e Operator Alexander Vinnik In US Custody After Immediate Extradition From Greece
Bitcoin.com News

Robinhood CEO: Schwab’s Not Buying Us, We’ll Do The Acquiring
Financial Advisor IQ

CFTC Staff Withdraws No-Action Letter To Victoria University Of Wellington, New Zealand Regarding A Not-For-Profit Market For Certain Event Contracts
CFTC

London Stock Exchange Boss: Teach About The City At School
This is Money

Moscow Exchange To Reduce Use Of Dollars As Collateral
Reuters

Sri Lanka’s New President Ranil Questions CSE As Platform For SOE Privatisations
Daily FT

Sweden’s Junior Market Becomes Europe’s Hottest For Growth Stocks
Financial Times

ICE Reports Strong Q2 2022
ICE

ICE Approves Q3 Dividend Of $0.38 Per Share
ICE

ICE CEO Jeff Sprecher On Q2 2022 Results – Earnings Call Transcript
Seeking Alpha

London Stock Exchange Says Refinitiv Costs And Savings On Track
Euronews